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The goal of this blog is to publish my thoughts on a variety of economic and political topics in the hopes that people who find them educational or beneficial will utilize them and/or forward to others who might find them interesting and/or worthwhile to promote to others, possibly including politicians who can push some of these ideas to fruition. The topics in my blog are meant to be of value on a long term basis, not a daily diary or political issue of the day log. If the information posted is useful to you, by all means utilize it and/or forward it as you see fit. If not useful, then merely ignore it. There are no universally agreed upon truisms and too little tolerance between some of those with opposing viewpoints to successfully convince the people with hardened opinions to move away from them. I am an analytical type person who will try to be as factual as I am able.

I disdain the current popularity of name calling and condemnation of viewpoints with no factual alternatives or logical solutions given that I see so often. If you don't have a solution based on fact and logic, then opt out of the discussion because you have nothing to contribute. My background is a degree in Economics from the University of Michigan and 39 years working in middle management jobs for a major retailer. My opinions are forged on the personal experence of life, family, friends, and work as well as triumphs and mistakes that I have made and hopefully learned from. My hope is that this blog helps you.

My first topic will be about personal finance. I chose that one first because most of us work long and hard just to survive but not all of us realize our dreams of becoming financially independent from the labors of our work. Much of our political votes/thinking also focus on the economy and in particular how well we are personally doing financially.

It is relatively simple, without sacrificing the enjoyment of living for 'today' and even at moderate incomes, to retire as a millionaire or multi-millionaire, if you focus on that goal consistently from a young age. It is also simple to ensure that your child or grandchild retires rich. It merely requires a one time gift of just $2,000 invested wisely and the passage of time. Please read my first post on this blog to learn more.


Getting it right on Politics, Economics, and Personal Finance

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Saturday, January 18, 2020

Inherited IRAs Withdrawals – Strategy for New Rules in 2020

After reading this newspaper article about the 2020 tax rule changes, I came up with the following strategy for those who inherit IRAs. As I have always preached, Roth IRAs and 401Ks are much better than Traditional IRAs and 401Ks, but with the new rules, even Roth requires developing a strategy to handle the new changes in the law.
Starting in 2020, new rules concerning IRAs eliminate inherited lifetime “stretch” IRAs except for spouses and people who are less than 10 years younger than the deceased (for example a brother or sister within 10 years of your age). The old “stretch” IRAs required inheritors to withdraw annually for life from the inherited IRA (both Traditional and Roth IRAs) with the withdrawal amounts required each year based on their age.
The new rules, with the exceptions previously mentioned, requires IRA inheritors to withdraw the entire amount within 10 years. However, you do not have to withdraw the money every year, You are allowed to skip years, or withdraw it all in the 10th year – your decision. In both the old stretch IRAs and the new current rules, Roth withdrawals are not taxed.
Since once withdrawn from the Roth IRA, any of that withdrawn money re-invested in a non-IRA will be taxed as it grows – both dividends and capital gains, my advice is to withdraw money each of the required 10 years and then use those Roth withdrawals to reinvest to the maximum allowed into your own Roth IRAs and Roth 401Ks each year. Remember, since you are using tax free money to do this, unlike a regular Roth IRA deposit using your own “earnings”, this is like getting the tax free initial investment of a Traditional IRA and the tax free withdrawal of a Roth IRA – the best of both IRA worlds!!

If some of the inherited IRAs or 401Ks are Traditional, your mandatory withdrawals during that 10 year period will be taxed. So take the net after tax and invest them in Roth IRAs and/or 401Ks each year up to the government imposed limit allowed. There would be no additional tax, they will grow tax free, and the withdrawals will be tax free and not mandatory at age 72 as is the case with Traditional IRAs and 401Ks.

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