[Stu from NYC]

Originally Posted by Boomer

The guy who wrote the post I am quoting here gets my vote.

Btw, I have said it before and I will say it again……

I don’t care how many commas you have in your total IRA amount, it could be well worth taking the time to look into converting to Roth…….

especially when you are in what can be a very sweet spot after retiring, when your earned income goes down, but before RMD age.

Generic financial advice cannot apply in this one.

And — another thing — speaking of generic advice — that thing about waiting to take SS until full SS age is also generic advice. There are many different scenarios where that tedious mantra should not apply because taking the money and running at 62 could make a lot more sense in a variety of circumstances — including being able to stay out of tax-deferred accounts longer.

Why in the heck do people think financial advice should be one-size-fits-all.

Boomer

Even worse are so called financial advisors who really have no idea what they are doing other than lets sell annuities so we can make some money

[manaboutown]

Originally Posted by Stu from NYC

Even worse are so called financial advisors who really have no idea what they are doing other than lets sell annuities so we can make some money

As an admonition to others to examine your conversion documentation carefully, I had an inept stock bookie foul up the paperwork on my IRA to Roth conversion back in 2002 which was the only year possible and thankfully a sensible year for me to do the conversion. The docs did not look right to me so I took them to a very smart advisor at another branch office of the same outfit who redid them during the last couple of days of December. If the conversion had failed I had no second chance as my income was always too high to qualify. Additionally, IMHO it makes no sense to do a conversion in a high tax bracket year or a high market year. 2002 was the perfect year for the conversion both income-wise and stock market-wise for me. I was able to strike when the iron was hot and got in under the wire. Whew!!!

[CoachKandSportsguy]

The model ONLY looked at the effect of IRA size with max social security benefits taken at by couple at FRA, minimal other taxable account income and the current RMD schedule to find where the size of the IRA at age 65 this year would cause the IRMAA tax to happen as a result of the RMD schedule, and only a married couple's limit, not a single limit. That is all, what people read into post and interpret is beyond the control of the post, as well as conflating this specific model output with other benefits of a ROTH, which was not the model output. The model makes no judgement on the value of a ROTH

Originally Posted by Boilerman

I don’t think people with lots of money have any less aversion to paying taxes as those who don’t.

That's an assumption to justify your position. They may have an aversion, but may leave the decision to someone else as the issue is a result of success, and they focus on success, and let someone else worry about execution after the results. From what i have seen from these people, success is the key focus, not the avoidance of taxes as their focus.

Originally Posted by Boilerman

IRMAA can be permanent, not just transitory in some situations.

Known issue, model calculates same. With a cap so as income increases it becomes a smaller percentage, and against other tax percentages, it is not the biggest to pay so it becomes less important. again, the model only looked at if IRMAA will effect a couple from an IRA RMD after a certain size. It does appear to be permanent or payable over many years with an IRA over $4 under the constraints of the model, which would currently start at the first RMD. That is all the model says, nothing else.

Originally Posted by Boilerman

But Roth conversions can, done properly, give you control over future RMDs and taxable income so one can avoid IRMAA and other consequences of having higher taxable income.

Nothing suggested that is not the case, especially when near the level of having to pay penalties and taxes. The model has many inputs and currently known income tax by income level, deductions or standard, different incomes sources, social security at what age, etc.. but my post only focused on the effect of ONE variable under ONE scenario, which may be a common scenario,

The model makes no other judgements about the benefits to a Roth, the conversion to a ROTH, or even that a ROTH is the best option, and a ROTH does have drawbacks as compared to putting the conversion into a taxable account. The model also does not know of future tax law changes, which means that the model is not clairvoyant, and is only good as fy2024 anticipated taxes and levels, and very conservative IRA annual increases, given interest rates, geopolitical instability, and deterioration of the US standard of living by capitalism.

So if a reader here, who has not had much tax experience, reads that everyone doing ROTH conversions because of the threat of IRMAA tax, feels that they should follow because of what they read, maybe the information they are reading is incomplete as far as how much money they have relative to others posting on the board. under the current tax laws, IRMAA will not apply to everyone, so maybe they should visit with their financial advisor and tax person and see if they should be concerned about IRMAA or not. . and then while they are at it, they should also ask if a ROTH conversion is good for them, and how much.

IRMAA will not apply to everyone reading here under the fixed scenario presented. Other scenarios have not been presented.

[kkingston57]

Originally Posted by Caymus

Are the "super rich" actually on Medicare? Don' t they use some sort of Concierge System?

Probably have both. Medicare for the hospital part and concierge for the doctors

[Boilerman]

Originally Posted by CoachKandSportsguy

The model ONLY looked at the effect of IRA size with max social security benefits taken at by couple at FRA, minimal other taxable account income and the current RMD schedule to find where the size of the IRA at age 65 this year would cause the IRMAA tax to happen as a result of the RMD schedule, and only a married couple's limit, not a single limit. That is all, what people read into post and interpret is beyond the control of the post, as well as conflating this specific model output with other benefits of a ROTH, which was not the model output. The model makes no judgement on the value of a ROTH



That's an assumption to justify your position. They may have an aversion, but may leave the decision to someone else as the issue is a result of success, and they focus on success, and let someone else worry about execution after the results. From what i have seen from these people, success is the key focus, not the avoidance of taxes as their focus.


Known issue, model calculates same. With a cap so as income increases it becomes a smaller percentage, and against other tax percentages, it is not the biggest to pay so it becomes less important. again, the model only looked at if IRMAA will effect a couple from an IRA RMD after a certain size. It does appear to be permanent or payable over many years with an IRA over $4 under the constraints of the model, which would currently start at the first RMD. That is all the model says, nothing else.



Nothing suggested that is not the case, especially when near the level of having to pay penalties and taxes. The model has many inputs and currently known income tax by income level, deductions or standard, different incomes sources, social security at what age, etc.. but my post only focused on the effect of ONE variable under ONE scenario, which may be a common scenario,

The model makes no other judgements about the benefits to a Roth, the conversion to a ROTH, or even that a ROTH is the best option, and a ROTH does have drawbacks as compared to putting the conversion into a taxable account. The model also does not know of future tax law changes, which means that the model is not clairvoyant, and is only good as fy2024 anticipated taxes and levels, and very conservative IRA annual increases, given interest rates, geopolitical instability, and deterioration of the US standard of living by capitalism.

So if a reader here, who has not had much tax experience, reads that everyone doing ROTH conversions because of the threat of IRMAA tax, feels that they should follow because of what they read, maybe the information they are reading is incomplete as far as how much money they have relative to others posting on the board. under the current tax laws, IRMAA will not apply to everyone, so maybe they should visit with their financial advisor and tax person and see if they should be concerned about IRMAA or not. . and then while they are at it, they should also ask if a ROTH conversion is good for them, and how much.

IRMAA will not apply to everyone reading here under the fixed scenario presented. Other scenarios have not been presented.

Looks you’ve modeled a scenario for your own situation. That’s great, I’ve done the same. The issue is when you try to generalize your advice for others. These situations are complex and generalized advice does more harm than good.

[Stu from NYC]

Originally Posted by Boilerman

Looks you’ve modeled a scenario for your own situation. That’s great, I’ve done the same. The issue is when you try to generalize your advice for others. These situations are complex and generalized advice does more harm than good.

But it does give one something to consider and think about.

[Boomer]

Re. RMD amount based on brokered CDs, at year’s end

Two Questions:

2023 is the first time I have ever bought brokered CDs. I have been buying short term, 3-6 months. All but one of those have already come due and paid the interest during this calendar year.

But now I have one (possibly soon to be more) that will not pay the interest until 2024. I know that the interest on brokered CDs does not compound. I also know that the amount originally invested in the CD fluctuates along the way — which makes no difference if held to term.

But what I do not know is — how is the year-end value of a brokered CD figured into an IRA for the calculation of the RMD? Original invested amount? Or amount on 12/31?

That range in value will be relatively moot. I am just curious about that part, but the bigger question is about the interest???………

Somewhere along the line, I picked up that the interest on a brokered CD (even if not yet paid in a calendar year due to no compounding) is somehow included in the amount on 12/31, whether it be for the RMD or as interest income from a taxable account. Am I understanding that correctly? Is interest projected somehow even though it has not yet been received, but cannot be thrown over into then next tax year? How does that work?

Boomer

PS: Before the snarky unhelpful types pile on and imply that I am stupid for asking a question like this on TOTV and should ask an accountant — save it. Go read a different thread if you do not like this kind of discussion. I do.

[retiredguy123]

Originally Posted by Boomer

Re. RMD amount based on brokered CDs, at year’s end

Two Questions:

2023 is the first time I have ever bought brokered CDs. I have been buying short term, 3-6 months. All but one of those have already come due and paid the interest during this calendar year.

But now I have one (possibly soon to be more) that will not pay the interest until 2024. I know that the interest on brokered CDs does not compound. I also know that the amount originally invested in the CD fluctuates along the way — which makes no difference if held to term.

But what I do not know is — how is the year-end value of a brokered CD figured into an IRA for the calculation of the RMD? Original invested amount? Or amount on 12/31?

That range in value will be relatively moot. I am just curious about that part, but the bigger question is about the interest???………

Somewhere along the line, I picked up that the interest on a brokered CD (even if not yet paid in a calendar year due to no compounding) is somehow included in the amount on 12/31, whether it be for the RMD or as interest income from a taxable account. Am I understanding that correctly? Is interest projected somehow even though it has not yet been received, but cannot be thrown over into then next tax year? How does that work?

Boomer

PS: Before the snarky unhelpful types pile on and imply that I am stupid for asking a question like this on TOTV and should ask an accountant — save it. Go read a different thread if you do not like this kind of discussion. I do.

Your IRA custodian will determine the value of your IRA, including brokered CDs, on December 31. As I understand it, this will include the market value of the CDs (not what you invested) and any accrued interest that would be taxable income if it were not in an IRA.

[Stu from NYC]

Originally Posted by Boomer

Re. RMD amount based on brokered CDs, at year’s end

Two Questions:

2023 is the first time I have ever bought brokered CDs. I have been buying short term, 3-6 months. All but one of those have already come due and paid the interest during this calendar year.

But now I have one (possibly soon to be more) that will not pay the interest until 2024. I know that the interest on brokered CDs does not compound. I also know that the amount originally invested in the CD fluctuates along the way — which makes no difference if held to term.

But what I do not know is — how is the year-end value of a brokered CD figured into an IRA for the calculation of the RMD? Original invested amount? Or amount on 12/31?

That range in value will be relatively moot. I am just curious about that part, but the bigger question is about the interest???………

Somewhere along the line, I picked up that the interest on a brokered CD (even if not yet paid in a calendar year due to no compounding) is somehow included in the amount on 12/31, whether it be for the RMD or as interest income from a taxable account. Am I understanding that correctly? Is interest projected somehow even though it has not yet been received, but cannot be thrown over into then next tax year? How does that work?

Boomer

PS: Before the snarky unhelpful types pile on and imply that I am stupid for asking a question like this on TOTV and should ask an accountant — save it. Go read a different thread if you do not like this kind of discussion. I do.

These can be interesting and educational discussions and I like having them here

[Boomer]

Originally Posted by Stu from NYC

These can be interesting and educational discussions and I like having them here

Me, too, Stu.

Boomer

[mntlblok]

Originally Posted by Boomer

Boomer

PS: Before the snarky unhelpful types pile on and imply that I am stupid for asking a question like this on TOTV and should ask an accountant — save it. Go read a different thread if you do not like this kind of discussion. I do.

Same. Where is the list of these types compiled? :-)

[Boomer]

Originally Posted by retiredguy123

Your IRA custodian will determine the value of your IRA, including brokered CDs, on December 31. As I understand it, this will include the market value of the CDs (not what you invested) and any accrued interest that would be taxable income if it were not in an IRA.

Thank you. . .that brings me to another question, or two:

So, am I understanding correctly that the operative words there are “accrued” and “would be”……..

Does that then mean that the brokered CD’s interest is projected and taxable (or figured into next year’s RMD amount) though not paid out in the current tax year? (Kind of phantom-like?)

Actually, the CD I have is in an IRA. It will not reach its term until 2024 when it will pay the interest to me — no compounding along the way, I know. BUT……..

It sounds like “accrued” interest will apply inside an IRA, too; therefore, having an effect on next year’s RMD. Is that how it works?

If so, how is the accrued interest figured? Does an interest amount just show up on 12/31, even though it is not accessible to the CD holder yet?

I am brand new to brokered CDs. I obviously need a little fine-tuning on the subject.

Boomer

[retiredguy123]

Originally Posted by Boomer

Thank you. . .that brings me to another question, or two:

So, am I understanding correctly that the operative words there are “accrued” and “would be”……..

Does that then mean that the brokered CD’s interest is projected and taxable (or figured into next year’s RMD amount) though not paid out in the current tax year? (Kind of phantom-like?)

Actually, the CD I have is in an IRA. It will not reach its term until 2024 when it will pay the interest to me — no compounding along the way, I know. BUT……..

It sounds like “accrued” interest will apply inside an IRA, too; therefore, having an effect on next year’s RMD. Is that how it works?

If so, how is the accrued interest figured? Does an interest amount just show up on 12/31, even though it is not accessible to the CD holder yet?

I am brand new to brokered CDs. I obviously need a little fine-tuning on the subject.

Boomer

I am only about 99 percent certain, but CDs generate taxable income every tax year regardless of whether or not the interest is actually paid to the owner. The earned, but not paid, interest is included in the December 31 valuation of your total IRA, and that is the amount used to calculate your RMD for the following year. Note that, with a brokered CD, you can sell it at any time at the current value, and you will not lose any accrued interest up to the date of the sale. Some people have stocks, gold, and even real estate in their IRAs, but the RMD is still calculated on the market value of the IRA assets as of the end of the year. The RMD is always calculated on the market value of the IRA assets on December 31. And, unless you have a self-directed IRA, you have an IRA custodian, who is responsible for determining the market value of your IRA assets, and reporting it to the IRS.

[Stu from NYC]

Originally Posted by Boomer

Me, too, Stu.

Boomer

Having said this think there are times you get very conflicting opinions and best to consult a tax professional.

In the meantime keep them coming.

[Altavia]

Originally Posted by mntlblok

Same. Where is the list of these types compiled? :-)

In my ignore list...