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I'm not a big fan of most "financial journalism", and I think too many people try to read too much into the various happenings at head office.

But I have to say, this is kind of interesting:

Berkshire was a net seller of equities in the last quarter. It was a big amount this time, but net sales aren't unusual. Also net sales the prior quarter, also not unusual to see a couple of quarters in a row. But it's actually the seventh quarter in a row with more equity sales than equity purchases. At some point it's tempting to read something into the trend. Watch what they do, not what they say?

The most obvious possible lesson is that the three stock pickers aren't seeing a target rich environment for buying good stocks at fair prices. Really the boss I guess, since he's the one who decides capital allocation. Another reasonable inference is that the recent higher short term interest rates make it a little less unattractive to sit on a bigger pile of cash while waiting, so it is (for the moment) acceptable to sit on more cash than usual.

The more out-there speculations are that there is in fact a big deployment of some type on the horizon, or that (atypically) management is anticipating a market rout, or that Mr Buffett has permanently given up on big allocations to publicly listed US stocks. I don't put much weight on that last one : )

Jim

The more out-there speculations are that there is in fact a big deployment of some type on the horizon, or that (atypically) management is anticipating a market rout, or that Mr Buffett has permanently given up on big allocations to publicly listed US stocks.

I can't remember a time Berkshire raised cash anticipating a market crash. Was there?

Buffett is pretty famous for saying he doesn't know what the market is going to do tomorrow, next week, next year.

But I guess if he felt valuations were stretched he's okay trimming and sitting on cash earning 5%.

But it's actually the seventh quarter in a row with more equity sales than equity purchases. At some point it's tempting to read something into the trend. Watch what they do, not what they say?

The most obvious possible lesson is that the three stock pickers aren't seeing a target rich environment for buying good stocks at fair prices. Really the boss I guess, since he's the one who decides capital allocation. Another reasonable inference is that the recent higher short term interest rates make it a little less unattractive to sit on a bigger pile of cash while waiting, so it is (for the moment) acceptable to sit on more cash than usual.

To these factors, I would add a few more:

-- Continuing to clear the decks for new leadership. The extent to which Mr. Buffett has already passed the operational baton to Mr. Abel was clearer to me at this year's annual meeting than it had been before. Perhaps he is doing the same with the investment portfolio.

-- It was objectively a reasonable time to cut the Apple allocation, both because it was an outsized percentage of the equity port by any traditional portfolio management standard, and because the Mag 7 valuation doesn't make a lot of sense given its growth prospects compared to those of the hyperscalers. Throw in China market share risk and booking some of the massive gains seems like a move toward safety.

-- A Democratic Party sweep in the coming U.S. elections is a low-probability event, but if it happens, corporate tax rates will likely rise. In the event of a Republican Party sweep, corporate tax cuts, if any, would likely be minor (Mr. Trump has floated a cut fro 21% to 20). The enormous, rapidly-growing national debt is beginning to have actual ramifications. So, net-net, the likelihood of this tax bill, large as it is, looking like a bargain in the future, might have seemed a reasonable bet.

I can't remember a time Berkshire raised cash anticipating a market crash. Was there?
Buffett is pretty famous for saying he doesn't know what the market is going to do tomorrow, next week, next year.

Certainly that is what he says--he doesn't try to make predictions, and I believe him, taken narrowly.

But he isn't insensitive to prices. I imagine that historically the buying and selling activity isn't entirely uncorrelated with market valuation levels, at least among the large and conservative things that he favours.

Jim

“Another reasonable inference is that the recent higher short term interest rates make it a little less unattractive to sit on a bigger pile of cash”

Particularly when inflation has reduced significantly…

Stocks are definitely not cheap. With the flash crash on Monday, I took a look at Amazon’s valuation. It’s clearly an incredible business but it was sobering to see the extent of share based compensation backed out of what they call free cashflow. Certainly made me step away and reinforce just how expensive some of these great big tech names are, if you include SBC. The Berkshire capital allocators must find valuations much too high when looked at in true owner earnings terms.

Of course the really interesting thing for Berkshire shareholders: what happens now? The current cash pile is clearly in the territory, that Buffett can’t stand still for a long period now. It will be interesting to see what happens now.

"Of course the really interesting thing for Berkshire shareholders: what happens now? The current cash pile is clearly in the territory, that Buffett can’t stand still for a long period now. It will be interesting to see what happens now."

True

Warren said something like it would be hard to justify holding $150b to shareholders.

Soon we will be looking at $300b or so on the balance sheet.

I think it is highly likely that Warren continued to sell Apple and others in July, which could actually obliterate the $300 Billion cash mark almost immediately.
It seems WEB remains a step ahead of the rest of the world, and has a real sense of urgency due possibly to valuations and the need to leave things in good order for when he retires.
Someone on this board made a really great comment which is that three years ago BRK had 4 men on their board other than Warren that were over age 90.
Today they are all dead.
Time waits for no one.
It will be very interesting to see how things unfold from here.

“-- Continuing to clear the decks for new leadership. The extent to which Mr. Buffett has already passed the operational baton to Mr. Abel was clearer to me at this year's annual meeting than it had been before. Perhaps he is doing the same with the investment portfolio.”

If we are allowed to speculate about factors, a possible extension of the above could be that Greg has made clear that once he is in charge he will likely be more trigger happy on the sell button for some of the large positions. After all the corporate culture seems to support “clean slate” approach, CEO is chief risk officer and all that (see e.g full liquidation of Mr Simpson portfolio). On the one hand it would be uncharacteristic of Mr Buffett to sell ahead of this, but on the other hand the knowledge that the position is likely to be sold in future could make it a rational decision to sell ahead of that future. Especially if that future is fast approaching and valuation and tax considerations support it on the margin.

Hopefully it won't be a dividend but when board member Susan Decker was asked in an interview at the Annual Meeting about a potential dividend down the road, she mentioned that she thought the way Costco structured their dividend was a possibility for Berkshire.
Costco pays a small regular quarterly dividend and then occasionally pays a special dividend when the cash pile gets to be more than they realistically need.
Sort of makes sense, at least to me.

Hopefully it won't be a dividend but when board member Susan Decker was asked in an interview at the Annual Meeting about a potential dividend down the road, she mentioned that she thought the way Costco structured their dividend was a possibility for Berkshire.

I absolutely hope Ms Decker fails to influence the rest of the board on this matter, which could evolve into a consensus decision after WEB leaves the scene. I don’t know about everyone else, but I structured my entire taxable brokerage account in such a way as to minimize and/or eliminate the distribution of any dividends, that is, the majority of my BRK position is in there. I have two sizable pensions, and a 401k which will be hemorrhaging unneeded RMD’s in just a couple years that I cannot stop. I’ve already converted a bunch to a Roth, but I just can’t justify any more conversions at this point. It’s the law of diminishing returns. Pay a tax today to save on a tax later is beginning to lose its’ logic on me personally, as I age. I’d rather embrace the inverse — never pay a tax today that you can put off until tommorrow. There are a couple Congressmen out there who are advocating some grassroots legislation to get rid of RMD’s altogether. That would be fantastic, especially for many of us who don’t need to drawdown as much from their retirement accounts. Any dividends that may emanate out of Berkshire, even a modest 2%, will absolutely crush me in taxes. I never would have thought I’d be paying more in taxes during retirement than when I was working, paying the considerable tax on the salary I enjoyed with the airline. I’m sure there are many out there like me. Who on this board is calling for a dividend at Berkshire and why? I may just have to move to Monaco or something similar. I wonder if Jim knows any storage units there I can rent, big enough for a bed and a table lamp. 😂

I may just have to move to Monaco or something similar. I wonder if Jim knows any storage units there I can rent, big enough for a bed and a table lamp

I could make housing suggestions, but it won't do you much good if you're a "US Person" for tax purposes! Live where you like, you still gotta send in those forms. Surrendering your citizenship and taking another doesn't even work, unless you can make a good case that it's not for tax advantage. e.g., your folks were Belgian.

But if it works for you, you want what's called locally a "chambre de bonne" or "chambre de service" (maid's room). A room you give the staff to sleep in, sometimes without a kitchen. The going price seems to be about 450,000-500,000 euros for about 12-17 m2. (129-183 square feet)

Jim

I absolutely hope Ms Decker fails to influence the rest of the board on this matter, which could evolve into a consensus decision after WEB leaves the scene.

💯

I wouldn't mind if Warren replaces Ms. Decker with another capable individual who also owns a lot of stock on Berkshire board. After all these years, Ms. Decker hardly owns any Berkshire stock and is an anomaly among the Berkshire board members. I double she can think like an owner. She can casually say things like big one-time dividend because she doesn't suffer from it (huge tax bills to owners). The capital allocation priorities at Berkshire should be (in that order):

1. Invest internally at a decent rate of return,
2. Purchase businesses in whole (80-100%) or minority stakes (mostly in public equities) if they are available for a fair price,
3. Buyback stock liberally below intrinsic value, and
4. Declare a small but variable dividend if necessary (cash building up with no other opportunities listed in 1,2, or 3 are avaialble for the foreseeable future). This fourth one is common among European companies.

I never would have thought I’d be paying more in taxes during retirement than when I was working, paying the considerable tax on the salary I enjoyed with the airline. I’m sure there are many out there like me. Who on this board is calling for a dividend at Berkshire and why? I may just have to move to Monaco or something similar. I wonder if Jim knows any storage units there I can rent, big enough for a bed and a table lamp.

Not so fast, if you are a US citizen. The United States uses citizenship-based taxation (CBT), rather than residence-based taxation (RBT), meaning US citizens are taxed on their worldwide income regardless of where they live and where the income was earned.

Also, you can't take it with you. If not Uncle Sam, someone else will blow it! Since you already have more than you will ever need, don't sweat paying taxes too much <-:)

https://www.irs.gov/individuals/international-taxp...

Any dividends that may emanate out of Berkshire, even a modest 2%, will absolutely crush me in taxes. I never would have thought I’d be paying more in taxes during retirement than when I was working, paying the considerable tax on the salary I enjoyed with the airline.

I know it sucks paying taxes. I don't like them either. Does anyone?

(Actually, Warren says he enjoys paying US tax. That he wouldn't have had the same opportunities in other countries. So, the price of admission.)

Anyways, I know many retirees who would love to be in your shoes. Two pensions that seemingly cover your expenses, RMDs you won't need, a big chunk of Berkshire.

The median retirement savings for retirees is like $200k.

So, maybe it's better to pay a lot of tax, because that means you're doing well.

There are a couple Congressmen out there who are advocating some grassroots legislation to get rid of RMD’s altogether

So… don’t pay taxes when it’s earned, and don’t pay taxes on it later either?

I wonder if these are the same Congressmen complaining abut the deficit.

So… don’t pay taxes when it’s earned, and don’t pay taxes on it later either?

I wonder if these are the same Congressmen complaining abut the deficit.

The idea behind such legislation being that many seniors today with sizable retirement accounts don’t need to drawdown as much to survive, so there are calls by many to at least reduce, if not eliminate, mandatory RMDs to help with the taxation burden, which ostensibly is probably why the age for when mandatory RMDs kick has been incrementally rising in recent years, now at 73 for those born in my age bracket.

Obviously, one cannot avoid taxes indefinitely. I understand that. Death and inheritance taxes will get you at some point, but deferring tax can also be a sound estate planning tool, especially if the idea is to achieve a step up basis for heirs, or in my case, leaving virtually my entire estate to charity. Philanthropy, as a social remedy to help give back to the needs of others, in lieu of taxation, can arguably be a better tool to address these needs than surrendering to the onerous inefficiencies of government taxation.

(Actually, Warren says he enjoys paying US tax. That he wouldn't have had the same opportunities in other countries. So, the price of admission.)………… So, maybe it's better to pay a lot of tax, because that means you're doing well.

Yeah, but I'm not Warren. It’s easy to enjoy paying tax at his level — I am still not at his pinnacle of success. There is always a catastrophic medical event or litigious event lurking around the corner that can bankrupt any one of us at any time during our lifetimes, so it is comforting to know that you have enough financial wherewithal to endure that hardship. Retaining as as much as possible by paying no more and no less than what we are legally obliged to pay through taxation is consistent with that goal.

Also, see above. The alternative is to defer or minimize taxes to the maximum extent possible, and instead return those fruits to where they can serve a whole panoply of organizations dedicated to societal need, and probably more efficiently too.

Going back to the OP’s original question, who on this board agrees with Ms Decker and supports a possible Berkshire dividend and why?

especially if the idea is to achieve a step up basis for heirs

Money that is subject to RMDs, money in tax deferred accounts, don't get a step up in basis. When an IRA is inherited, the heir has to take [taxable] distributions from it, and drain it within 10 years (except for certain cases, like a spouse who draws according to their own RMD). When a Roth IRA is inherited, it also has to be drained similarly, but are tax free (due to being Roth).

So eliminating mandatory RMDs will delay taxes, but will not eliminate them.

Going back to the OP’s original question, who on this board agrees with Ms Decker and supports a possible Berkshire dividend and why?

In general, I do not like dividends at all. Receiving a dividend is functionally equivalent (from the investor point of view) to selling small amounts of stock periodically to realize income. But dividends don't allow you to time the realization of income, instead the company is deciding when you receive that income. And when the company decides, that complicates your tax planning and timing. Further, dividends can't be balanced against capital losses, while capital gains can be. So in summary, a dividend is far less flexible.

Going back to the OP’s original question, who on this board agrees with Ms Decker and supports a possible Berkshire dividend and why?

That's why I miss the polls of the old board. While we still wouldn't know the "why" they would answer the "who" (quantity), while answers to your question in form of posts will only come from a handful of active posters and might not only not be representative of the silent majority here, but might actually give a completely distorted picture of the general mood and opinion of the Berkshire shareholders here.

In general, I do not like dividends at all. Receiving a dividend is functionally equivalent (from the investor point of view) to selling small amounts of stock periodically to realize income. But dividends don't allow you to time the realization of income, instead the company is deciding when you receive that income. And when the company decides, that complicates your tax planning and timing. Further, dividends can't be balanced against capital losses, while capital gains can be. So in summary, a dividend is far less flexible.

+1

Also, you pay tax on the entire dividend amount as opposed to selling stock where you pay tax only on the capital gain. Much more tax efficient to sell stock with embedded gain in addition to controlling the timing of it.

"Not so fast, if you are a US citizen. The United States uses citizenship-based taxation (CBT), rather than residence-based taxation (RBT), meaning US citizens are taxed on their worldwide income regardless of where they live and where the income was earned.

Also, you can't take it with you. If not Uncle Sam, someone else will blow it! Since you already have more than you will ever need, don't sweat paying taxes too much <-:)"

Correct on point 1! I've been paying it for 23 years. You do do get a tax break that varies depending on where you live. You can write down things like rental costs and utilities and you exempt somewhere up to $93,000. You also get tax credits for taxes paid in the country you live although it's not one to one. You have to total up your income earned from the country you live along with the income you get in the states (dividends, rental collection etc.).

I also want to say- correct on point 2, at least in my opinion. Berkshire owners are tax curmudgeons by nature but my god is it dizzying trying to avoid them! At the end of the day I'm ok paying so long as it's not absurd. I'd be ok with a dividend so long as it is really small. I've heard Warren talk about creating a dividend policy before. I would like that policy to stipulate that a dividend has to be capped at a certain percentage. In other words it can never go over the original percentage that is set. So if it's set at .5% (just an example) then it can never go over that amount. This allows for dividend growth (albeit small) as market cap increases but takes away the need to grow the dividend on a yearly basis like a pure dividend stock. It's win/win- those that want a dividend get it and those that don't want to be burdened with too many taxes limit their exposure.

"There is always a catastrophic medical event or litigious event lurking around the corner that can bankrupt any one of us at any time during our lifetimes, so it is comforting to know that you have enough financial wherewithal to endure that hardship."

As I face the prospect of retirement coming up this is the biggest thing that ways on my mind. This is akin to Warren's financial weapons of mass destruction comment back in 2004. And the main problem- for me at least- is that it makes the US the most unattractive place to retire. Health care costs are insane and it's not just that you have to worry about the costs as you live, you also have to worry about those costs being deducted from your estate. If you end up in the hospital or hospice the last three months of your life that can suck not only an enormous amount of money but also create one huge pain in the rear of your heirs. And then there's the litigious problem! Who know what the hell you could be sued for but in the US there's always something lurking.

I am trying my hardest to get my wife to consider Europe but she's just not having any of it. Having a public option in most countries makes private insurance entirely possible (it's the same here in Hong Kong). You don't have to worry about economic disaster if you get sick and the prospects of law suits are minimal. It's a damn shame because the US is such a great country but healthcare has become a problem that grew way our of control.

As I face the prospect of retirement coming up this is the biggest thing that ways on my mind. This is akin to Warren's financial weapons of mass destruction comment back in 2004. And the main problem- for me at least- is that it makes the US the most unattractive place to retire. Health care costs are insane ...


As a Canadian this flies in the face of my understanding of the US health care system - don't you get Medicare once you're 65? Perhaps Medicare standards are not up to standards in the private health care sector, but then again, if you're comparing the US with other countries as a place to retire, you should be comparing Medicare to other countries' public health care systems, like the care available in provinces in Canada or countries in Europe. My impression is that, while you won't get an MRI for a sore knee in Medicare, you won't get one in Canada either, and probably not in Germany.

So an alternative to consider, that Munger would probably agree with is, lower your standards. Medicare will take care of most of what's important, and you can live without the rest, if it's too expensive, amirite? And if you don't like the US system, how are you going to get health care outside of the US anyways, as a non-citizen?

DTB

You should check out Costa Rica. Excellent weather, good quality health care covering everyone, stable democracy, large US expat community…

Take a vacation and see if it is for you.

The idea behind such legislation being that many seniors today with sizable retirement accounts don’t need to drawdown as much to survive, so there are calls by many to at least reduce, if not eliminate, mandatory RMDs to help with the taxation burden, which ostensibly is probably why the age for when mandatory RMDs kick has been incrementally rising in recent years, now at 73 for those born in my age bracket.

The IRA was conceived as a tool to make it easier for middle and lower income people to save for retirement by deferring taxes. It is not supposed to be a tool to advantage rich people, which is why there are income limits and contribution limits. And originally there was an excise tax on IRAs over $1 million. The purpose of RMDs isn't to provide money to live on, it is to make sure the taxes are ultimately paid and not avoided.

I'm fine with that. The deal was I can defer taxes but not eliminate taxes, which I knew going in.

As a Canadian this flies in the face of my understanding of the US health care system - don't you get Medicare once you're 65? Perhaps Medicare standards are not up to standards in the private health care sector, but then again, if you're comparing the US with other countries as a place to retire, you should be comparing Medicare to other countries' public health care systems, like the care available in provinces in Canada or countries in Europe. My impression is that, while you won't get an MRI for a sore knee in Medicare, you won't get one in Canada either, and probably not in Germany.

Medicare is great. My MIL is going through some very expensive health care treatments at the moment and we've had zero problems with Medicare paying for anything she needs.

The tricky part is if you retire before 65 and have an income high enough that it exceeds the ACA subsidy thresholds. In that case, your maximum out of pocket insurance costs are capped at $18,900 or 8.5% of your income (IIRC, any clarifications welcome). Which is a lot to be sure. As an ex-pat you can get cheaper health insurance in Europe. I don't know if it would be worth moving to Europe just for that reason, but it can be done.

The tricky part is if you retire before 65 and have an income high enough that it exceeds the ACA subsidy thresholds. In that case, your maximum out of pocket insurance costs are capped at $18,900 or 8.5% of your income (IIRC, any clarifications welcome). Which is a lot to be sure.

https://www.kff.org/health-policy-101-the-affordab...

Premiums are capped at 8.5% of household income, right now.

https://www.healthcare.gov/glossary/out-of-pocket-...

The most you have to pay for covered services in a plan year. After you spend this amount on deductibles, copayments, and coinsurance for in-network care and services, your health plan pays 100% of the costs of covered benefits.
The out-of-pocket limit doesn't include:
Your monthly premiums
Anything you spend for services your plan doesn't cover
Out-of-network care and services
Costs above the allowed amount for a service that a provider may charge
The out-of-pocket limit for Marketplace plans varies, but can’t go over a set amount each year.
For the 2024 plan year: The out-of-pocket limit for a Marketplace plan can’t be more than $9,450 for an individual and $18,900 for a family.

Our bronze plan will cost us $28,780 this year, with an additional maximum OOP of $18,900 for in-network services.

Go out of network (which we do for some things) and it costs more.

The purpose of RMDs isn't to provide money to live on, it is to make sure the taxes are ultimately paid and not avoided.

But this isn't true. You can't avoid taxes on an IRA, you can delay them, but you can't avoid them, they will "ultimately be paid". After you die, whomever inherits your IRA will pay ALL the taxes due by the end of the 10th year. In fact, it's just the opposite, it is money OUTSIDE an IRA (i.e. in a taxable account) that will usually avoid taxes via the step up of basis upon death.

"You can't avoid taxes on an IRA"

one thing I am considering is to do a large contribution to my Donor Advised Fund and use that deduction to offset some of the tax on an IRA withdrawal.

Another option to reduce IRA taxation are Qualified Charitable Distributions (QCDs) directly from your IRA to charity after age 70 1/2. The QCCDs aren't taxable and in 2024 an individual can do QCDs up to $105,000. Not having this income on your tax return reduces your Adjusted Gross Income which also impacts your Medicare premiums two years from now. Of course, you aren't spending the money personally in this scenario but it is a way to avoid taxation from your IRA while living if you have enough cash flow from other sources. Along these lines, IRAs are great assets for charities to inherit as they get the money free of income tax whereas individuals will pay at their ordinary rates. Some opportunity here on the estate planning front to have all dollars to charity come out of IRAs and dollars for individuals to come from non-IRA/stepped up basis assets.

But this isn't true. You can't avoid taxes on an IRA, you can delay them, but you can't avoid them, they will "ultimately be paid". After you die, whomever inherits your IRA will pay ALL the taxes due by the end of the 10th year.

That's exactly what I'm saying. As I said (and you bolded), the purpose of RMDs is make sure the taxes are ultimately paid and not avoided. Beneficiary IRAs also have RMDs. That's why.

Beneficiary IRAs also have RMDs.

Not anymore! The SECURE act eliminates RMDs for non-spouse beneficiaries. The new rule is that the beneficiary has 10 years to withdraw the entire amount. They can withdraw each year of the 10 years, they can withdraw the whole thing in the first year, they can withdraw the whole thing in the 10th year, or anything in between. And each year, the taxes are due on what was withdrawn. I have seen a recommendation to withdraw 1/10 in year 1, 1/9 in year 2, 1/8 in year 3, ..., 1/2 in year 9, and the remainder of the balance in year 10, that's also one way to do it ensuring roughly proportional withdrawal each year.

No, inherited IRAs do have annual RMDs for non-spouse beneficiaries.
The IRS has been waiving them for the last couple of years while they finalize the rules.
It's funny, the IRS says their *is* an RMD, but if you didn't take it there is no penalty. Leave it to the government to play silly word games.


Apparently, Roth IRAs do not have RMDs, but I have seen "authoritative" sites disagree, some say both yes and some say no.

I agree with the recommendation of taking 1/(# of years remaining) as probably the optimum way.

No, inherited IRAs do have annual RMDs for non-spouse beneficiaries.

Like I said, this is NOT correct anymore after the SECURE act has passed. Most typical non-spouse heirs do not have RMDs and must drain the account entirely within 10 years. However, tax law being tax law, they made it somewhat complicated. If the person died before Dec 31, 2019, then RMDs still apply to non-spouse heirs. But if the person died on or later than Jan 1, 2020, then RMDs do not apply to most non-spouse heirs (there are a few exceptions, like minors, disabled, or someone less than 10 years younger than the decedent).

Here's a link to the investopedia page about it (I was about to link the IRS pages, but those are even less clear) - https://www.investopedia.com/terms/i/inherited_ira....

"As a Canadian this flies in the face of my understanding of the US health care system - don't you get Medicare once you're 65? Perhaps Medicare standards are not up to standards in the private health care sector, but then again, if you're comparing the US with other countries as a place to retire, you should be comparing Medicare to other countries' public health care systems, like the care available in provinces in Canada or countries in Europe. My impression is that, while you won't get an MRI for a sore knee in Medicare, you won't get one in Canada either, and probably not in Germany.

So an alternative to consider, that Munger would probably agree with is, lower your standards. Medicare will take care of most of what's important, and you can live without the rest, if it's too expensive, amirite? And if you don't like the US system, how are you going to get health care outside of the US anyways, as a non-citizen?"

Yes, fair point. I should add- I will be 57 end of September and my wife will be 46 end of this year so I've got some time before Medicare. To answer your second question- I am also a UK citizen. My mother was from Scotland and I got the passport. But to be specific, I'm just assuming that if you have a visa to live in an EU country then you have access to buying private insurance. I could certainly be wrong about that.

My mother was from Scotland and I got the passport. But to be specific, I'm just assuming that if you have a visa to live in an EU country then you have access to buying private insurance. I could certainly be wrong about that.


I also have a UK passport but I don’t expect I would get public health insurance there. I suppose I could move there and then I might well be covered.

As for private insurance, it might well be that Canadian and UK and other European healthcare, their public systems having been designed with economy and affordability in mind, might have more affordable options available under private insurance - I don’t know.

If capitalism were allowed to work in healthcare, it really shouldn’t be very expensive to get the 90% of basic healthcare that provides 99% of the benefit, but that’s a very big ‘if’.

Mark, you are reading it wrong.

"Q: Are annual RMDs required for inherited IRAs?
A: You transfer the assets into an Inherited IRA held in your name. Money is available: You must begin taking an annual RMD over your life expectancy beginning no later than 12/31 of the year following the original account holder's death."

It is still a bit complicated:
"In the recently issued final rules, the IRS confirmed that most beneficiaries must take annual RMDs throughout the 10 years, with the account fully depleted by the end of the tenth year.

This applies specifically to cases where the original account holder had already started taking RMDs before they passed away.

Exceptions to the rules:
If the original account holder passed away before reaching their RMD age, beneficiaries have more leeway in timing their withdrawals within the 10-year window.
But the account must still be emptied by the end of the 10 years.



Ah, here it is Pub 590B
"Payment under the 10-year rule.
If the IRA owner dies before the required beginning date [that is, before the decedent was taking RMDs] ... no distribution is required for any year before the 10th year."

So it depends on whether or not the person was taking RMDs, which used to be age 70 1/2, is now 73, and will be 75 in 2033.
Now the question is what percentage of people die before age 73 vs. how many die after 73. A quick search revealed "average life expectancy for a 65-year-old man is 83, female is 86." Upper income people (that is: us) live about 5 years longer.
So more retirees at 65 will die AFTER their RMD start date than before, so most inherited IRAs will have an RMD.

When you think about it, these days when you hear of somebody dying at 75, people say "That's a young age to die."

The rules are different for "eligible designated beneficiaries", but almost all people are NOT eligible.

Of course, if the inherited IRA is large you'd better take an annual distribution or you will get a huge taxable income in the 10th year.

Ah, here it is Pub 590B
"Payment under the 10-year rule.
If the IRA owner dies before the required beginning date [that is, before the decedent was taking RMDs] ... no distribution is required for any year before the 10th year."

So it depends on whether or not the person was taking RMDs, which used to be age 70 1/2, is now 73, and will be 75 in 2033.

Yes, I have read this interpretation from multiple sources.

Question is: how much is the RMD? If the beneficiary is, say, 25 years old, then he isn't going to find his RMD in the tables that are published. The tables I've seen start at age 72.

Question is: how much is the RMD? If the beneficiary is, say, 25 years old, then he isn't going to find his RMD in the tables that are published. The tables I've seen start at age 72.

Seems to me the only REQUIRED minimum distribution would be 100% by the 10th year.

So one could wait until the 10th year and then take it all. But most people would find it wise to spread the distribution over the 10 years to minimize taxes.

However that isn't REQUIRED.

Question is: how much is the RMD? If the beneficiary is, say, 25 years old, then he isn't going to find his RMD in the tables that are published. The tables I've seen start at age 72.

Apparently there is a table, but you use is in a weird manner:

"Example: Karen inherited a traditional IRA from her mother Linda, who died at age 85 in 2020. Under the SECURE Act, Karen is subject to the 10-year rule. She must empty the inherited IRA account by December 31, 2030. The new IRS final regulations also require her to take annual RMDs based on her life expectancy in years one through nine of the 10-year payout period. Due to the IRS waiver of the penalties for missed RMDs in years 2021, 2022, 2023, and 2024, Karen does not need to take RMDs for those years. However, beginning in 2025 she must take an annual RMD for years 2025-2029 from the inherited IRA.

So, how are Karen’s annual RMDs for 2025-2029 calculated assuming she turned age 60 in 2020 (the year her mother Linda died)? Let’s start with the 2025 RMD. Karen turns 65 in 2025. You might think we would look at the current IRS Single Life Table, see that the life expectancy of a 65-year old is 22.9 and assume that Karen’s 2025 RMD is the 12/31/24 value of the inherited IRA divided by 22.9.

But that would be too easy. Instead, we must go back and figure out what Karen’s baseline life expectancy was in 2021 (the year following the year Linda died) when she was 61, and then subtract 1.0 for each subsequent year up to 2025. The life expectancy of a 61-year old under the current IRS Single Life Table is 26.2. Subtracting 1.0 for each subsequent year gets us to a 22.2-year life expectancy for Karen’s 2025 RMD. Karen’s 2026 RMD will be 21.2 (22.2 -1.0), her 2027 RMD will be 20.2 (21.2 – 1.0), and so on until 2030. In 2030, Karen must take out all of her remaining of the inherited IRA."

https://irahelp.com/slottreport/how-are-annual-rmd...

You should check out Costa Rica. Excellent weather, good quality health care covering everyone, stable democracy, large US expat community…

Take a vacation and see if it is for you.

I would not recommend going there for health care. I recently had an appendectomy in a rural hospital in Costa Rica. It was cheap, and the outcome was fine, but I was not impressed with having to climb over cots to get to the one toilet (with no seat but at least there was a nail to hang my IV bag). The lizards on the ceiling were entertaining and I got to practice my Spanish, because only the surgeon spoke much English.

There are some fancier hospitals, but it is not uniformly great health care.

Bringing this back to BRK, I doubled up on my BRK in my last years before Medicare kicked in. I eliminated all my dividend paying investments and lived off a cash pile for two years. My insurance under the ACA dropped from $1500 a month to $100.

one could wait until the 10th year and then take it all.
Nope.

Man, talk about going down a rabbit hole!

Google is your friend.
Required Minimum Distributions for IRA Beneficiaries
https://www.irs.gov/retirement-plans/required-mini...

Says:
Take entire balance by end of 5th year following year of death, {does not apply for most people}
or
Distribute based on Table I
* Use beneficiary’s age at year-end following year of owner’s death.
* Reduce beginning life expectancy by 1 for each subsequent year.
{ Note that this is different from your own IRA. Your own IRA uses the L.E. of your actual age each year. Inherited IRA starts with your L.E. of your age when the owner died, and subtracts 1 for each subsequent year, regardless of your L.E. at that age. It is not allowed to lookup or 'recalculate' a new starting life expectancy after distributions have begun.}

Leads to: https://www.irs.gov/publications/p590b#en_US_2023_...
Table I
(Single Life Expectancy)
(For Use by Beneficiaries)

This table starts at Age 0 with Life Expectancy 84.6.
Ends at age 120+ with LE 1.0

The entire table all by itself: https://www.fidelity.com/building-savings/learn-ab...

whew!!!

"I also have a UK passport but I don’t expect I would get public health insurance there. I suppose I could move there and then I might well be covered."

You qualify for NHS. The bigger issue would be the logistics behind it. If you had some type of procedure you had to have done you'd have to fly there, get it logged in the system (which means going to a dr.) and wait your turn to have it done. That would be a lot of flying back and forth and you'd also have to have someone put you up. Not really viable but you definitely would qualify for NHS.

I lived and worked in London for four years as an expat on assignment. I was covered under a private health plan.

NHS is a disaster. Poor and rationed care with long waits for even the simplest procedures.

As a Canadian this flies in the face of my understanding of the US health care system - don't you get Medicare once you're 65? Perhaps Medicare standards are not up to standards in the private health care sector, but then again, if you're comparing the US with other countries as a place to retire, you should be comparing Medicare to other countries' public health care systems, like the care available in provinces in Canada or countries in Europe. My impression is that, while you won't get an MRI for a sore knee in Medicare, you won't get one in Canada either, and probably not in Germany.

A digression on a digression

A fun little fact about the US ("never socialism!") health care system is that the US government spends more per capita on public health care than the Canadian government does.
The then has a very large private system's costs on top of that.

Canada's system is certainly has corners that are between creaking and broken, but to be charitable that's not exactly rare around the world, and everybody is covered. Ultimately every country is faced with an unlimited demand for health care with finite supply, so it has to be rationed somehow: by price or by waiting list, generally, or a mix of the two. Or by connections or by clout.

Jim

"If capitalism were allowed to work in healthcare, it really shouldn’t be very expensive to get the 90% of basic healthcare that provides 99% of the benefit, but that’s a very big ‘if’."

OMG! Health care in the US is absolutely a capitalist industry. Most hospital systems are for profit with as much as 30% of health care premiums going to investors. Moreover, even religious charitable hospital systems are structured to give administrators outlandish salaries at the expense of nurses' and technicians' income. We physicians have been hobbled with preauthorization, (read health care denial), for years, all in service of the annual report. "Don't deliver or at least delay service" is the mantra. I have to get approval for what I deem necessary for my patient from someone with no medical training.

Capitalism is a hopeless model for health care delivery. Why do you think our per capita cost is so high above the rest of the world with worse clinical outcomes?

Don't get me started on big Pharma.

As long as the bottom line is the target, healthcare will always be an afterthought.

fd

Health care in the US is absolutely a capitalist industry.

This is so true! Not only that, but housing is a capitalist industry!!! And even food is a capitalist industry. Education is a capitalist industry in large part. Heck, pretty much all the critical things in Maslow's Hierarchy are capitalist industries.

A fun little fact about the US ("never socialism!") health care system is that the US government spends more per capita on public health care than the Canadian government does.
The then has a very large private system's costs on top of that.


Some numbers


US Healthcare Expenditures were $4.5B or $13,483 per person (2022)

Total		$4500B		$13,483

Feds	33%	$1485B		$ 4,449
State	15%	$ 675B		$ 2,022
	---	------		-------
	48%	$2160B		$ 6,471

Of that roughly 50% is covered by the government (Fed and State)

The Canadian number I found was $8,740 CAD or roughly $6,351 (USD) - basically a wash.

https://www.cms.gov/data-research/statistics-trend....

My experience with both systems is that care is MUCH faster, MARGINALLY better, but WAY MORE expensive in the US. On another note, my sense is that there is a lot of demand for better care in Canada but its against the law to purchase private insurance or provide private services. If these restrictions were lifted the level of personal expenditures on health care in Canada would rise significantly.



tecmo
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