Talk of The Villages Florida - Rentals, Entertainment & More
Talk of The Villages Florida - Rentals, Entertainment & More
#16
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No one should make financial decisions based on posts here. However, posts may stimulate one to investigate further to verify information and see how it relates to their personal circumstances. This kind of discussion can be helpful. Roth conversions carry a number of complex ramifications. Much info can be found at irs dot gov as well as the boglehead site. The post wrt medical expenses is one such issue to be considered and illustrates the case for tax diversification. The Roth conversion decision is not one size fits all. |
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#17
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__________________
The further a society drifts from truth the more it will hate those who speak it. George Orwell. “Only truth and transparency can guarantee freedom”, John McCain |
#18
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GREAT COMMENTS! Keep them coming!
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#19
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Some years ago when the rules were no doubt different than they are today I had an otherwise very low taxable income year and took advantage of that to convert my IRAs to Roth IRAs. Of course I had to pay tax on my withdrawals but IMHO I benefited because today at age 75 I face no RMD issues. Too, when the day comes I do take distributions from my Roth they will not be taxable - unless of course the rules change. It was a personal choice which I did not analyze by calculating an IRR or anything like that; personal circumstances and perspectives differ so it is very much an individual matter.
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"No one is more hated than he who speaks the truth." Plato “To argue with a person who has renounced the use of reason is like administering medicine to the dead.” Thomas Paine |
#20
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#21
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This may (or may not) happen with any investment vehicle with a fluctuating asset value--not just stocks. In your case, the timing turned out to be to your advantage. You were lucky. At least so far. The opposite could just as well have occurred if the asset value had decreased after having been moved to the Roth. If your stocks now in the Roth go down, the value of the Roth decreases. Your post may imply that, somehow, the Roth protects assets from a falling market. Not at all. I do agree that the tax free nature of Roth money is sweet. YOU own the whole enchilada. When one looks at their balance of a traditional IRA, one needs to understand they only own PART of it. If the balance is $100k and you're in the 25% tax bracket, you only own $75k. Sobering thought. Sorry...I don't mean to restate the obvious. |
#22
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Plus...........without getting political, what if tax rate brackets are reduced. |
#23
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#24
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There is no doubt I will pay taxes on the IRA, the only question is how to minimize them. If I convert now (or in the next few years) and the ROTH portfolio goes down, I lose. If it goes up I win, true even without converting ,of course. The difference is that if you assume the market will go up over the next 20 years (which it should) then you may end up paying more taxes by NOT converting then converting. Of course you could end up paying more taxes if you convert too much at one time. Those sheets I mentioned are supposed to help with that decision. The problem is understanding what they are telling me. I was hoping to find someone who was familiar with those programs.
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#25
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#26
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So if the paid finacial advisor is so smart, why are they still working?
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#27
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I'm not familiar with the programs you mention, but one thing that you may be able to take advantage of is converting part of your IRAs to a Roth in years where you have a low tax rate. That happened for me in the years between when I retired and when I had to start taking distributions from my regular IRAs. Nobody can predict when the markets will go up and when they will go down, so I'd just ignore that. But, you do know when you will have to start taking the RMD from your IRAs.
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#28
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Several financial web sites, like Fidelity and Vanguard, have free calculators to help you make a "Roth" conversion decision. When I looked at doing one a few years ago the answer was definitely NO! There just wasn't enough time left, read life expectancy, to re-coop the tax cost and make any money.
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#29
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Here is what Fidelity has to offer re a Roth conversion evaluater:
Fidelity Investments |
#30
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Great site - Thanks
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Closed Thread |
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