"Dave" wrote in message
...
On Tue, 25 Nov 2008 14:35:08 -0800, "Capt. JG"
said:

One of the major problems is that
older people are forced to withdraw money, which means they do take a
loss.
This needs to be addressed

Well, at least you got it partly right.

Your conclusion is incorrect, of course, if one accepts the proposition
that
there is no loss until assets are sold. The distribution rules are
designed
to make sure Uncle gets his cut. They require that once the taxpayer
reaches
70 1/2 a minimum amount of assets be taken from the 401K each year and
put
somewhere else, and taxes are owed when the assets are taken out of the
401K. But there is no requirement that the assets be sold. They can be
transferred to a taxable account, and held in that account however long
you
like.

The problem is not the requirement to withdraw money, but the fact that
the
amount that must be withdrawn is based on the balance as of the close of
the
prior year. So if the total in the account is halved following the end of
the last year, the withdrawal requirement of 5% becomes 10% of the current
value of the account solely by operation of the formula. That wasn't what
was intended when the Congress critters decided it was critical for Uncle
Sam get its cut from all those rich oldsters.


If the assets are "taken out" and the taxes are paid, then what becomes of
the reduced assets is a loss.

It's nice to know that you've finally agreed with me.

--
"j" ganz @@
www.sailnow.com