- 6,463
Thank you for that information.
Dave Ramsey hates whole life insurance ...(does he know Anything about Insurance) ?
- Thread starter Mike Siegal
- Start date
Thank you for that information.
- 4,576
Non spouse for sure has to start RMDs. Really not a big deal as the person can receive the entire amount tax free. Only thing taking just the RMDs is doing is allowing the balance to stay invested for a longer time is something that is tax free compared to taking lump sum & buying same investments in an after tax investment account that would have dividends & interest reported annually & Capital gains/losses reported either when sold or when a mutual fund traded their underlying holdings (portfolio turnover)
For a spouse, it depends if the spouse assumes the Roth like they can. If they assume it, it becomes theirs & no RMDs needed. If they for some reason processed it as an inherited spousal IRA, it would have RMDs. No idea why someone that is a spouse wouldn't assume it as allowed, but I have seen agents/bank workers/stock brokers mark the wrong claim box out of either ignorance or possibly trying to force out RMDs so the rep can sell the person new life insurance or Long term care with the RMDs
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- 6,463
That leads me to two more spouse inherited IRA questions.
These are both TRADITIONAL, not Roth, IRA questions.
1) Spouse A older, required to be taking Traditional IRA RMD's. (pre 2020 if it makes any difference.) Spouse B is younger, not yet at an age where traditional RMD's are required.
You said spouses can add the deceased spouse's IRA to their own.
So Spouse A dies and Spouse B chooses to add Spouse A's traditional IRA to Spouse B's traditional IRA. Does the RMD obligation go away and not come back until Spouse B reaches RMD age?
2) Spouse A and Spouse B as before.
Spouse A inherits a non-spouse IRA (pre 2020) and is taking RMD's.
Spouse A dies, Spouse B inherits Spouse A's remaining interest in the inherited IRA.
My understanding at this point is:
Spouse B may not combine the inherited inherited IRA with any other IRA's they own, whether inherited or non-inherited.
Spouse B is mandated to continue taking RMD's for the inherited inherited IRA based on the life span of the original heir of the inherited IRA.
That one has made my head spin working it out. Do I have it right?
- 4,576
IRS rules all depend on whether the owner died before or after Required Beginning Date(RBD)--IE before or after age 72, now 73 & soon to be 75 I believe under secure act 2.0. the rules then also are driven by who is the beneficiary as to what options they have (spouse/ non-spouse/ entity trust-estate-charity)
1. If death before RBD & spouse sole bene, the spouse bene can treat the IRA as their own or role it to their own IRA & no RMD needed until surviving spouse reaches their own RBD. If death after RBD, surviving spouse has to take the current year RMD if the deceased hadn't yet, but then the surviving spouse can assume the IRA or roll to their own IRA & not have to take RMDs until their own RBD. Sometimes it can be a bad idea to roll an IRA to a new or existing IRA as a new or existing one may have load charges or new surrender schedule compared to merely stepping into the spouses IRA & keeping it.....assuming it is a quality product that lines up with what the person wants it invested in
2). Because this has become an inherited IRA, it is still technically the original owners IRA, it will always stay an inherited IRA. It will say something like this:. Justin Bieber ABO(as beneficiary of) Gertrude Bieber IRA. If Justin dies, the beneficiary he listed on it will now step into the ABO position. Secure Act 1.0 eliminated the right to inherit those & use the stretch IRA from pre 2020. It will have to be emptied within 10 years after Justin's death.
When my mom died in November 2019(CPA by trade & I think she knew the laws), I disclaimed my half of her IRAs as I am in a high tax bracket & have future pension/401k/ savings. Because she had me & my sister, per stirpes as beneficiary, I was able to disclaim my 50% share & it flowed to my 4 children (per stirpes). Anyone can disclaim any inheritance of any kind, they just can direct it where they want it to go as a disclaimer is saying "treat it like I pre deceased the owner", so it will flow past to the next beneficiary in line. Had my mom not listed per stirpes (by the roots of family tree), it would have flowed per Capita to my sister as 100% instead of 50%> So, each of my 4 children got 12.5% of the IRA now each have their own pre 2020 stretch IRA. They will receive an annual Inherited RMD check around Christmas (I bet the auto RMD date to be around Christmas) & will get this increasing check until they are around age 75..(unless they are dumb & empty it faster)...what a great Grandma. .But, if one of them were to pass away, their listed bene, even if their spouse or me, would fall under the current inherited IRA laws that state a maximum RMD period of 10 years. Instead of taking just the RMD annually during that 10 year period, it would likely be smarter to take 1/10th of it each year to equalize the tax rather than 9 small RMDs & the largest sum in the final 10th year.
PS...I believe this all to be factual, but verify with IRS publications etc.
- Thread starter
- #17
- 527
You saying Term is competitive with Whole Life ???
- 11,278
No... He's saying that there are far more term options and riders than there was before in the 80s by making term a more popular and viable option
- Thread starter
- #19
- 527
thank you David... you have 'A way with Words' ~ !
TexasAgentLJ
New Member
- 5
I think it's important to remember who his client base is. They aren't people with well-crafted financial strategies.
There are a LOT of people who like the idea of Whole or Universal life, but have a near 0% chance of paying that policy for the duration.
We've all been there. A client doesn't like the idea of "getting nothing" when the term runs out. They want a permanent policy. You sell them one, knowing they are going to raid the cash value and surrender the thing within 5 years.
Those are the people he's talking to.
There are a LOT of people who like the idea of Whole or Universal life, but have a near 0% chance of paying that policy for the duration.
We've all been there. A client doesn't like the idea of "getting nothing" when the term runs out. They want a permanent policy. You sell them one, knowing they are going to raid the cash value and surrender the thing within 5 years.
Those are the people he's talking to.
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