Quote:
Originally Posted by retiredguy123
The capital gains rate does not apply when you withdraw money from a retirement account, because the income is all taxed as ordinary income. You are correct that the medical deduction does not kick in until your medical expenses exceed 10 percent of your AGI. But, if you spend a few months in a nursing home, you can run up a bill of tens of thousands of dollars, and all of that qualifies as medical expenses. Also, if you are in assisted living, most of the cost (about 60 percent) will qualify as a medical deduction.
|
rg, I understand that about ordinary income tax. But in paragraph 2 of my quote I was talking about cap gains on a taxable account stock sale.
Hey, maybe you can answer this question for me about Roth conversions. Can stocks be transferred in-kind from a traditional IRA to a Roth if the ordinary income tax is paid on the face value of the stock at the time of the transfer?
Btw, I think converting, once in a while, on the way to 70 and 1/2 can work out as a good option if the tax year projection is shaking out to make sense to do it while you can.
And you are absolutely right about how quickly costs of nursing home and long care can pile up. But it would still be better if they had left the in excess of AGI percentage at 7.5%. Actually, I am pretty sure that just before the tax law changed, it was 10% except for those over 65 — who got 7.5%. Too bad they could not have left that age 65 thing alone.