Talk of The Villages Florida - Rentals, Entertainment & More
Talk of The Villages Florida - Rentals, Entertainment & More
#91
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First one easy question - on CD's outside of retirement accounts interest is taxable when paid (not as it is accrued). The taxpayer has to have constructive receipt (be able to get their hands on the money to be taxable). As to whether accrued interest on a CD is added to market value in a retirement plan used as a basis for calculating. The answer would be appear to be yes after doing research though I cannot find any specific reference to it in the code or regs. As indicates before a minor problem as this increase in market value due to accrued interest would be divided by the holder over their life expectancy. A reminder - start doing the work for your 2023 Qualified Charitable Donations now - if you qualify. A wonderful way to reduce income for both income taxes and IRMMA.
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Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passions, they cannot alter the state of facts and evidence. John Adams |
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#92
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#93
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Looking for advice regarding RMD‘s on IRAs, and approaching that age where you have to start taking money out And possible tax consequences
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#94
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Flat tax. Everyone pays
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#95
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rg123, I have owned CDs over the years, too, but they were always regular bank CDs that compounded, making the interest available to take when it posted throughout the term, and that interest was taxable, outside of IRAs. I understand all that. But — this is the first time I have ever owned brokered CDs, and somewhere I picked up the idea (I think on TOTV) that interest on a brokered CD, inside an IRA, would become a factor in the RMD calculation even though it was not compounding and had not yet been posted. And outside an IRA, the brokered CD interest that had not yet been posted could somehow be taxed…….. Two differences in a brokered CD and a regular CD are the fluctuating value of the brokered CD before term and a lump sum paid at the end of the brokered CD’s term instead of compounding. Those two things — I understand……. BUT now…..I am starting to wonder if the concern I have about possible consequences of brokered CD interest BEFORE being posted was a complete misunderstanding on my part……Or was it? (It never made sense to me or seemed fair that way, but I have never had any reason to expect tax law to make sense or to be fair.) Looks like maybe my question was much ado about nothing — maybe. Boomer
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Pogo was right. Last edited by Boomer; 10-28-2023 at 08:50 AM. |
#96
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Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passions, they cannot alter the state of facts and evidence. John Adams |
#97
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Thanks. Years ago, I had a zero coupon bond that never credited any interest. But, I still had to pay income tax on the "imputed" or "phantom" interest every tax year. Isn't that the same way a long term bank CD works? I thought that, even if the bank doesn't actually credit interest to your account, the IRS still wants to tax you on interest every year.
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#98
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Hey, Haggar, thanks, I am into QCDs. In fact, I tell friends about them, before their eyes begin to glaze over, as they start to look furtively for an exit. I think it was 2015, not sure, when QCDs were made permanent in the tax law instead of having to wait until late in the year to find out if QCDs would be a thing in each given year. But I was not old enough yet then to worry about RMDs. When the 2017 tax law changes came into play, the old charitable deduction could not help much anymore for a lot of taxpayers but if RMD age, the QCD could work even better — and it fortunately was already in the tax law and somehow escaped being taken out in 2017. It is good that the QCD can also avoid IRMAA for those who are charitably inclined and/or would rather give money to charity than to the government for higher Medicare costs. But numbers, of course, will vary by returns and inclinations. Btw, the reason I have been sounding a bit obsessed with tax questions is because November is when I try to project numbers to see if anything needs to be or can be adjusted. (Yes. I am a boring woman. ) Boomer
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Pogo was right. Last edited by Boomer; 10-28-2023 at 08:54 AM. |
#99
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#100
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I have yet to do anything over 3 or 6 months. Lately, I saw that it’s hitting more above 5% in available new CDs and I am getting ready to buy again. Still though……..weird and scary times we are in…….. I realize Fidelity’s money market is grazing 5 sometimes, but I think they collect basis points. Is that right? Boomer
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Pogo was right. |
#101
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Note that the Vanguard Federal money market fund current yield is 5.31 percent. The Fidelity Federal money market fund has a current yield of 5.02 percent. I think that advertised yields are calculated after any fees have been applied. I always buy the "Federal" money market funds because they pay a slightly higher interest rate than the regular MM fund. |
#102
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Looks like the official IRMAA brackets for 2024 have now appeared online.
Yes. I know that those are based on the 2022 MAGI, but, at least, those numbers can act as a gauge to get an idea about 2025 brackets that will be based on NOW! If you find yourself teetering on the threshold of crossing over into IRMAA and you have reached RMD age but have not yet completed the RMD for 2023, it might be worth running some numbers to see if a QCD could rescue you. . . if giving to charity is more appealing than paying taxes and you do the math to see what works best for you. I think the IRMAA brackets seem unfair to single filers because probably more of them hit that threshold. I also know that IRMAA can sneak up on those who never thought about what could happen if income has been unusually high in a certain year. Anyway, if IRMAA could be an issue for you, well. . . time’s a wastin’. Boomer
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Pogo was right. Last edited by Boomer; 11-14-2023 at 03:10 PM. |
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