Talk of The Villages Florida - Rentals, Entertainment & More
Talk of The Villages Florida - Rentals, Entertainment & More
#46
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Annuity Equity and Roth
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We have about the same split as you do and it is working well for us too. The issue we faced as educators is we had a 403B and a 457 which work on pretax dollars. So the interest and monies earned get taxed upon withdrawal. We have been slowly moving some of those monies into a Roth so that future earnings will grow tax free. We had an accountant do a comparison and the taxes really do take a chunk out of your earnings. We are at a 22% bracket and when we have to do RMD's we will be in the 24% bracket so we are just going to roll money over so that we don't end up in the 32% tax bracket. Also as we age it is almost certain that one of us will die before the other. To maintain our standard of living I being the wife will probably need to pay for house maintenance and all the things I don't know how to do that my husband does like clean the sprinkler heads etc. He will have to do stuff that I do that he doesn't know how. However, I would have half as much to live off of because as a widow I only will receive half of his pension. If I don't change over to a Roth then I will be taxed at the single rate not the married filing joint rate on the extra 50% that I need to make up withdrawing from his 403B. There is so much stuff to think about. I wish I knew of an honest financial planner but most I have spoken to give me advice that I don't believe is in my best interest. So far we have been doing things with the help of an accountant who I ask questions and he runs the numbers. I don't let anyone invest for me. I do it myself. |
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#47
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#48
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#49
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Response to Friendly advice.
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#50
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There was a thread here a while back that discussed moving IRA money into a Roth, even though it meant an immediate tax hit in the process. Opinions varied because situations vary……. I had done conversions to Roth from our IRAs when we had first retired and were quite a few years away from the RMD age. My only regret is that I did not do it more often. I don’t know why I got distracted from my pay-now-so-we-don’t have-to-pay-later plan, but at least I did it a few times. If you have several years before RMD age, if I were you, I would keep doing those conversions. You bring up the concern of what can happen to the survivor’s income when only one is left. You are smart to be thinking ahead of that sad but inevitable event and to try to plan for it. As we reach RMD age, we are then well into Medicare age. At that point, IRMAA can rear its ugly head and you can find yourself paying more for Medicare if AGI crosses certain thresholds. The bigger the RMD, the more likely IRMAA will get you. (If you don’t know about IRMAA yet, find out. It is another reason to do Roth conversions if you can, while you can.) Boomer Last edited by Boomer; 06-26-2022 at 03:02 PM. Reason: Typo |
#51
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Here is another reason to transfer as much as possible (and if possible) into a Roth to at least reduce if not eliminate RMDs. Thankfully I was able to do so one year almost 20 years ago. I still get hit with this additional 3.8% tax on some income but not as much as I would if I had to take RMDs.
Net Investment Income Tax | Internal Revenue Service
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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 Last edited by manaboutown; 06-26-2022 at 10:50 AM. |
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