The strategy of taking out our pension funds/Carlos Pueblo

 The strategy of taking out our pension funds/Carlos Pueblo

There is a proposal of law to regular our 401k pension fund on the House Ways and Means committee to postpone the age of the requirement of the minimum distribution age from 70 1/2 to 72. I don't see any significant of the new law yet for some of the richest pensioners to delay their due to the IRS. Most of us, the commoners, need to withdraw our pension funds for our senior and non-earned income life. The RMD is shown on our pension funds at the end of the year to remind us to withdraw some of our pension in order to pay income tax back to the IRS, the share holder of our pension funds.

I agree that the income tax deferred is a good policy, a good politic. Various pension programs can provide vehicles to accumulate funds to help the poor to reach a financial independence. If we withdraw our pensions in a lump sum, then we must face tremendous tax obligation. You will pay more tax than before. All withdraw is counted as income of that year. I find that I take the RMD in order to pay the minimum tax is the best strategy. I shall exhaust all my regular pension funds under the RMD first and then turn it on to the Roth. If I still have some left on my regular, then I shall convert a few to Roth.

The Roth plan is a after tax money under the pension program. All growth is non taxable. It is a benefit for the saver and the frugal to live within a budget. The Roth funds can be used in an emergency without the concern of income tax.

The up and down of the stock market can be a concern to the saver. We don't have many choices. All investment, including cash saving, has a certain risk to take. There is not much we can get to put our money in the bank and the U.S. dollar is diminishing. Look at the trillion of trillion dollars printed in the market. I can only live on anything on sale and quit cruise travelling, etc.