Talk of The Villages Florida - Rentals, Entertainment & More
Talk of The Villages Florida - Rentals, Entertainment & More
#31
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Those who are charitably inclined and want to minimize taxes on the RMD, might want to look at the possible use of a QCD for all or some of the distribution.
The QCD has been made permanent (?) in the tax law, but there are strict rules on getting the money from the IRA to a qualified charity in order to not have it appear as income. (btw, I see those comments in the thread about not taking financial advice from internet posters.....well, of course not. But financial advice from professionals (?) is not necessarily good either. The best overall thing that can come out of a thread like this is to get people thinking more and learning what further questions to ask and/or research. Please carry on. Last edited by Boomer; 06-27-2017 at 09:59 AM. |
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#32
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There are a number of websites that have a Roth vs IRA calculator. Just remember that when the RMD starts you will have to take out an about based on a government mandated percentage. That withdrawal may be more than you want or need.
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#33
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Here is a thought. Most of us have worked hard, sacrificed, saved for our retirement and you just might want to take that RMD and do something "extravagant" with it. Life is uncertain and short at best. Just a thought........
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Most people are as happy as they make up their mind to be. Abraham Lincoln |
#34
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Quote:
One of my favorite bumper stickers ! Sent from my iPhone using Tapatalk |
#35
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My other favorite ! Sent from my iPhone using Tapatalk |
#36
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I have always used the thought process to delay paying taxes as long as possible. So for me, a ROTH conversion does follow that logic. I invested in ROTH's when I was still working, but also used the 401 (IRA in sheep's clothing) along with the catch up provision as much as possible. Than when I retired converted the 401 to a self directed IRA. ROTH is good if you still get a W2, but use all vehicles available to defer taxes. Now with RMD's it does create a tax problem with SS, but still better to pay later than sooner IMHO. Tax laws change. They may get better or worse. Right now they will probably get better in the short term so take advantage of that if they do.
Taxes decimate returns, so use ROTH if you can. That does not mean you should ignore IRA/401K options. Both help defer taxes on earned income. Key phrase is "earned income" You need that to utilize either. BOGLEHEADS is a great site with a wealth of information on this topic. So if you get a W2 use ROTH first than IRA/401K. If you don't than live with what you did in the past.
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Life is to short to drink cheap wine. |
#37
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IMHO Roth conversion is purely a taxable decision. Somewhere in Nov/Dec, I do a tax "mock-up" (using last year's turbotax) and base my decision whether to convert on (how I feel about) the tax consequences. Have done so for the last 12+ years and have essentially driven my taxes into the less than 10% range after any conversion. Still have a small RMD, but it has become essentially tax-free.
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#38
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All good comments.
Taxes are at historic lows, I think with all the things going on, taxes will have to go up. Also, there is strong evidence that the law that allows our heirs to take the IRA/ROTH over their lifetime will change to a requirement to take the distribution within 5 years. "petsect" has a good point, he uses TurboTax to test his conversion amount to see the effect on taxes. I do that too. I have 7 years to convert my wife's IRA to a ROTH, but I collect SS in 5, so it looks like doing to conversion will save the most in taxes. One thing I haven't seen anyone mention is that you can have a "do over". You can "convert" any amount you want this year and recharacterize it by October 15th of next year. It's like placing a bet on a horse race after the race is over. Restriction apply, so be sure you follow the rules. If you convert, say, $100,000 this year and when you do your taxes next year you find out it puts you in a very high tax bracket, you can put some of that money back into the IRA like it never even happened (no penalty from the IRS). |
#39
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........
Last edited by Boomer; 07-20-2017 at 08:25 PM. |
#40
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Quote:
Looks like 30 year highs. |
#41
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Your chart shows 1933 thru 1987 as being much higher
Best Answer: Partial History of U.S. Federal Income Tax Rates Since 1913 Applicable Year Income brackets First bracket Top bracket Source 1913-1915 - 1% 7% Census 1916 - 2% 15% Census 1917 - 2% 67% Census 1918 - 6% 73% Census 1919-1920 - 4% 73% Census 1921 - 4% 73% Census 1922 - 4% 56% Census 1923 - 3% 56% Census 1924 - 1.5% 46% Census 1925-1928 - 1.5% 25% Census 1929 - 0.375% 24% Census 1930-1931 - 1.125% 25% Census 1932-1933 - 4% 63% Census 1934-1935 - 4% 63% Census 1936-1939 - 4% 79% Census 1940 - 4.4% 81.1% Census 1941 - 10% 81% Census 1942-1943 - 19% 88% Census 1944-1945 - 23% 94% Census 1946-1947 - 19% 86.45% Census 1948-1949 - 16.6% 82.13% Census 1950 - 17.4% 84.36% Census 1951 - 20.4% 91% Census 1952-1953 - 22.2% 92% Census 1954-1963 - 20% 91% Census 1964 - 16% 77% Census 1965-1967 - 14% 70% Census 1968 - 14% 75.25% Census 1969 - 14% 77% Census 1970 - 14% 71.75% Census 1971-1981 15 brackets 14% 70% IRS 1982-1986 12 brackets 12% 50% IRS 1987 5 brackets 11% 33% IRS 1988-1990 3 brackets 15% 28% IRS 1991-1992 3 brackets 15% 31% IRS 1993-2000 5 brackets 15% 39.6% IRS 2001 5 brackets 15% 39.1% IRS 2002 6 brackets 10% 38.6% IRS 2003-2008 6 brackets 10% 35% IRS The lowest rate between 1936 and 1980 was 70%. Today, the top tax rate now is 35% of earnings in excess of $357,701. In the earlier period, budget deficits were minimal, in the latter, they have been a huge problem. |
#42
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More about RMD
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ROTH IRA you still take out $5k. Vanguard and FINRA websites, among others, have an RMD calculator. It's good to be aware of ROTH IRA vs Conventional differences early in your working and saving career. |
#43
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Quote:
Top bracket is 39.6% |
#44
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True, but very few get to this. At one time the top rate was 90%!!! But, there were deductions and such that really reduced the tax bite.
The average family pays less in taxes (percentage wise) than in the 80s. My point is that if you are going to do an IRA to ROTH conversion, you are better off now since taxes will probably increase, To be sure, all you need to know is 3 things: 1) How long you are going to live 2) What Washington is going to do 3) What inflation will be Good luck with any of those. |
#45
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As in my original reply
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What is interesting is assuming that Trumps tax plan passes, it will shake up any calculations you will do today. Will it happen? Frankly, I doubt it. But, we will get some sort of plan. The TALK is they must pass if by Thanksgiving so they can make it apply to this entire year. FASTEN YOUR SEAT BELTS IT IS GOING TO BE A WILD RIDE. Government is like a dog drooling over a steak. Few know or want to know that 42% of our now TWENTY TRILLION DOLLAR national debt is held by Social Security with no payback term or rate of interest. I expect the next steak they will grab will be retirement savings. Actually, while few see it for what it is that is one of the reasons why the government wants to fuel inflation is to devalue our currency. When, they devalue our currency it reduces what your savings, what your social security check, what your pension-if you have one, will buy. |
Closed Thread |
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