Why You Want To Spend Your IRA Money Before You Die
 

Information in the article below I found very interesting.


Why You Want To Spend Your IRA Money Before You Die

Yes. Get Distribution tax free. If your advisor doesn’t know how find one who does. Create a tax indifferent entity

Can you explain what you are meaning here?

I read the article linked in the first post. It confirmed what I know -- you (or your heirs) cannot take distributions from an IRA tax free, other than donating the withdrawal directly to a charity.

Anyone can create a charity which is a tax indifferent party. The wealthy use charities and foundations to save hundreds of millions. The IRS pays little attention to them.

Google and you will find dozens of articles. Make it work for you if the tax value is material

According to the National Center for Charitable Statistics (NCCS), more than 1.5 million nonprofit organizations are registered in the U.S.. They have no ability to audit a tiny fraction of them. It’s a loophole you could drive a cruise ship through

But with 85,000 more IRS agents on the horizon, they may begin to care...

Where does this crap about 85,000 agents come from? The IRS is grossly understaffed - try getting through to them. CPA's haven't been able to get through to the CPA hotline for months. The IRS is up to six months behind processing mail. Their software is from the 1980's.

Yes- some of the money is going to examination agents - but most of it is going to get the IRS running again.

And what's wrong with agents? They pay for themselves three times over.

Beyond laughable. I spent 30 years combating them on a daily basis. It’s public relations. Most will be answering correspondence for years.

Who is they.? It’s a bureaucratic nightmare with no one in charge now. No sane person would take it. The workers finish one case and there are thousands more behind it. Like the post office.

The computer systems are Stone Age. Needs 10 years of upgrading. Of course that will be done via patronage and fail miserably. Again

The article contains very good information about withdrawal requirements on IRA's upon death and options for beneficiaries.
The basis contention of the article is why cause the beneficiaries a tax burden when they withdraw the funds? Some will require a full withdrawal in no more than ten years. Maybe the owner should close out the IRA while they are living and save the beneficiary the tax burden. And that's a good thought but it comes down to tax brackets. What will be the bracket in the year(s) of withdrawal to the owner compared to the tax brackets of the beneficiaries? How does one know what the brackets will be to all of the beneficiaries in ten years? What will be bracket be to the owner if they distribute the entire balance? How old are the beneficiaries and will the IRA distribution have an effect on other areas - medicare, social security costs, food stamps?

tax laws are subject to change. All depends on timing. Shocked more people don’t make their voices heard to representatives. The current version is an insult to those who saved. It becomes a negative tax result which is not the point of retirement plans

Let's be clear here. What you are supporting is tax fraud. It is illegal and an affront to the idea that we all pay our fair share. Yet here you are suggesting people wealthy enough to have an IRA where the taxes might be a burden commit a crime to defraud the government. Shame on you.

I know certain highly known people have created false charities and used that money for their own fun and not for any charitable purpose, like paying for a huge painting of themself. They are tax cheaters as well.

You don't need to create a false charity. A legal one will do just fine. I read a lot of IRS Form 990's filed by charities. One that stands out was a charity created to sound like the well known "Make a Wish" charity. It is a common tactic to make the charity name sound like a well known charity. They collected almost $500K in one year. The CEO collected a salary of $200K, his wife, the vice President, collected $150K and his mother-in-law collected $100K as the treasurer. So, almost all income went to three people. The charity owned two condos at Disney World, and they would allow a sick child and their family to use one of the condos for a few weeks each year. For the rest of the year, they used the condos for themselves. They raised the money by hiring telemarketers, who received 80 percent of whatever donations they collected. I know this because the naive telemarketer who called me told me how much she would receive if I donated. This was not a false charity. As long as they provided a free vacation to a sick child, as stated in their mission statement, it was all legal. So, the problem is with our extremely lax laws for creating and operating charities. If a charity has a legitimate mission statement, and follows the IRS reporting rules, they have no obligation to be efficient or to spend the money wisely. Wasting taxpayer money in a charity is not illegal.

Wow. When I get a fishy call I ask the person on the other end what percentage of funds does the charity get. Very often the answer is I do not know.

Sad how easy it is to get away with fraud

I always assume you know what you are talking about when it comes to this kind of stuff, retiredguy123…….and , as usual, you just stated the facts here……

But, wow, this sure is a creepy loophole, not only on the backs of taxpayers, but shamelessly on the backs of sick children — and other targets, too, of course.

There certainly is a whole lot of slime slithering around through those loopholes. (shudder)

And yet, the much repeated marching orders, to be carried forth by those easily programmed to think the increasing of IRS staffing is after the middle class, were immediately planted in the minds and mouths of those who never look for the agenda behind such statements.

The firing up of ire and paranoia is being done by those who have their reasons for wanting things to stay as they are — with no accounting for accounting.

Back to the SECURE Act, passed in 2019, btw…..so…….

Helloooooo, that one is after the middle class who worked to fund those IRAs and using them up while alive can lead to being between-a-rock-and-a-hard-place with those caveats wisely listed by another poster in this thread. (Whoops, I intended to quote that poster, too, buy, hey, it’s a short thread now, so please go find that other post here, if interested, before you unnecessarily screw up your Medicare costs or your tax brackets.)

Boomer

Given taxes are likely to go up and my heirs are likely to already be in a high tax bracket when I pass, I'm wondering if it better to cash out my IRA's over the next X years at what will likely be a lower tax rate than the heirs will pay?

You can do a Roth conversion over time, pay the tax, and continue to earn tax free income. And, your heirs will owe no taxes when they inherit the Roth.