<p>Jym, each company sets its own default. Most default to spouse gets 50%. And yes it is determined prior to collecting.</p>
<p>Thanks. Time to nag DH againā¦</p>
<p>Another considerationā¦the 50% default is usually also the pension for spouses who die before collecting any of the pension. We were able to accelerate retirement status of my terminal DH at 57. He elected spousal 100% less than a month before his death.</p>
<p>Oh, so sorry for your loss, mominva.</p>
<p>Thank you.</p>
<p>jym, your DH doesnāt need to elect what type of payment he wants until heās ready to start collecting. No need to nag quite yet.</p>
<p>On this item, anyway. ;)</p>
<p>But if something happened to him, Iād have to track down the HR dept of his former employer and cry a river.</p>
<p>
Rules change all the time.</p>
<p>The Tax Reform Act of 1986, for example, completely rewrote the rules for rental property in response to abusive tax shelters.</p>
<p>I donāt think changing the rules to close a loophole like using a tax-advantaged retirement account to avoid taxes or for estate planning is not a scam IMO.</p>
<p>The rules should be changed. </p>
<p>We are talking handouts of billions of dollars to a few of the wealthiest people.</p>
<p>The way the retirement accounts are being used is the scam to the taxpayers to the tune of billions of dollars.</p>
<p>I think insurance companies, wall street major investment firms, big banks, and many in the mutual fund industry are benefiting from all the fees, loopholes, etc. and we little guys have to be smart not to get āripped offā. They tried to get legislation through, but the lobbyists were effective.</p>
<p>Using information, asking the right questions (and looking for the right information). I like indexed funds, but donāt have much in that because to have company matching, a big chuck of funds are in company 401k. Canāt move money out of 401k until quit/retire. Fortunately have a trustworthy financial planner so have diversity with lower risk with funds we could move.</p>
<p>Iām sorry for your loss, Mominva, but incredibly glad that you were able to accelerate the retirement the way you did.</p>
<p>SOSConcern: have you checked your 401K plan to see if you are allowed to move some of it out as a rollover to an IRA once you reach 59.5? We read about that, and it turned out that Hās 401K plan did have that provision, though his HR folks didnāt seem to know anything about it until we asked. He ended up leaving that company before the trigger point, but if heād stayed we would have definitely moved it out because the 401K had poor investment options and high fees. It was documented in the āSummary Plan Description,ā if Iām remembering correctly.</p>
<p>Sorry for your loss, mominva. Glad you are at least able to have your spouseās pension.</p>
<p>Hās pension was also reduced about 10% because he elected to have me get 55% of his pension after his death (heās more than a decade older than I am, so there is a pretty good chance I may outlive himāplus my folks are living longer than either of his did). It is a cost/benefit analysis to figure out whether it makes sense for the couple to choose a survival benefit and the % of pension. For his plan, 55% survival was the highest amount that could ble selected and you had to choose at least 10% for the spouse to have medical insurance with the retiree. </p>
<p>He gets a pretty nice pension, so even 55% survival benefit is much more than anything else I will qualify for, as I will get only modest social security benefits and no other pension, since my work history was fairly discontinuous. That with his life insurance and our IRAs and other assets will allow me to live comfortabaly.</p>
<p>"The rules should be changed.</p>
<p>We are talking handouts of billions of dollars to a few of the wealthiest people.</p>
<p>The way the retirement accounts are being used is the scam to the taxpayers to the tune of billions of dollars."</p>
<p>Of course the rules should be changed. They should get rid of the Rothās completely. Particularly the backdoor Roths the Roth conversions, the stock option deals, etc. But any thought of double taxing people and making it retroactive would have quite a backlash. Enticing people into converting and paying taxes up front, and then changing the rules and taxing them again would get some politicians voted out of office, and thatās what itās all about, anyways.</p>
<p>The problem is, you never manage to stick it to those few ultra wealthy people that massively benefit from these deals. They always find a way around it with their tax lawyers, accountants, and special deals in the tax code. It just ends up increasing taxes for the middle class, as always.</p>
<p>Nahā¦we can close loopholes for the wealthy. Notrichenough had some ideas. </p>
<p>The middle class isnt benefitting from some of the loopholes so they wont get hurt if some of the loopholes are closed. </p>
<p>There arent too many middle class people that have millions in retirement plans . ;)</p>
<p>"There arenāt too many middle class people that have millions in retirement plans "</p>
<p>I think it is very possible for someone who has had a middle class income to invest in their 401Ks and IRAs for decades, and end up with millions in their retirement plans after they retire. People who make it a priority, and are lucky enough to stay employed over the years stand a good shot at achieving that. Iāll bet that most of the people on this site would consider themselves middle class, and also would calculate theyāll eventually have millions in their retirement plans. Just as a small statistical sample.</p>
<p>Busdriver11, I posted the amount of people with iras over $1 million. ;)</p>
<p>I try to use the numbers that are available. :)</p>
<p>You arenāt middle class if income or wealth is considered. The same with many posters.</p>
<p>This is from the link.</p>
<p>āAccording to the new GAO numbers, 43 million taxpayers have IRAs of any size and 622,000 have between $1 million and $5 million in IRA accounts. But only 9,000 taxpayers have more than $5 million in their IRAs. The full GAO estimates are reproduced below. (Click on the GAO table to expand it).ā</p>
<p>I am sorry but there just arenāt that many people with iras above $1 million. 622,000 taxpayers are not even close to one percent of the population. </p>
<p>There are only 9,000 taxpayers with iras above $5 millionā¦if you want to start there .People with iras of $5 million are not middle class. </p>
<p>Retirement plans include 401Kās and IRAs. Many people have very little in IRAs, but the bulk of their retirement funds in 401Kās. If youāre just including IRAās, thatās not a comprehensive picture at all. So are you including all retirement plans in your numbers, or just IRAs?</p>
<p>I am just including iras.</p>
<p>$5 million in a 401k is not middle class either.</p>
<p><a href=āRetirement Rich List: 314 Have IRAs Averaging $258 Million Each, GAO Estimatesā>Retirement Rich List: 314 Have IRAs Averaging $258 Million Each, GAO Estimates;
<p>The article is talking about the abuses in irasā¦</p>
<p>"At the end of 2011, some 314 taxpayers had more than $25 million each squirreled away in tax deferred Individual Retirement Accounts, Congressā Government Accountability Office estimated today. Moreover, using data from the Internal Revenue Service, GAO estimated that a total of $81 billion was held in the lucky 314ās IRAsāor an average of $258 million per taxpayer.</p>
<p>81 billion in 314 peopleās irasā¦average of $258 million per taxpayerā¦</p>
<p>I think you can retire on less. ;)</p>
<p>When I look at your link, it looks like just IRAās. Itās difficult to save large amounts in your IRA because of the low contribution limits. Unless youāre doing a rollover, or one of those deals that arenāt available to most of us. It is, however, easier to accrue large amounts of money over decades in your 401K. Much higher contribution limits, and often people have employer contributions also.</p>
<p>Iāll bet there are far more people with big bucks in their 401Kās. Iām surprised so many people have managed to accrue large amounts in just their IRAs at all.</p>
<p>"$5 million in a 401k is not middle class either."</p>
<p>Maybe you wouldnāt consider that, but I think there are those who have lived a middle class lifestyle and saved over the years, still would consider themselves to be just that.</p>
<p>People will pay taxes on these IRAās eventually (unless they have been converted to Roths). And they will be at a high rate. Tax deferred is not tax free. Some of these people might be better off getting their money out of there and allowing the money to grow while paying capital gains rates, instead of confiscatory income tax rates. I donāt know that itās even smart to keep it in IRA accounts at those amounts.</p>