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Right now I am a "Preferred Client" at a Investment House, and they have assigned an Adviser to me for free, in case I have questions. We have had discussions about diversification of my accounts; and I consolidated my accounts under them to make it easier to manage. I have 6 accounts with them, 3 of which are taxable IRAs. I know they are trying to get me to sign up for the fee based Adviser services, they have hinted but don't press me on it--yet. They would charge 1% of my portfolio for fee based advising. I feel I don't have enough to justify that fee; in addition to being charged transaction and individual account fees (All are under 1%). My portfolio is doing as well as average in this bull market. I am having trust issues at the moment, perhaps I'll come around. I have managed my accounts on my own for 27 years, and weathered the 2008-9 downturn pretty much intact.
If you would comment to one or more questions I would appreciate it. I have not had the IRA distribution conversation with the Adviser.
1. Do you withdraw an IRA amount and the federal and state taxes are taken right then and there by the investment company; or is this tax bill due at income tax return time?
2. If you have more than one IRA, did you deplete one IRA before beginning withdrawals on the next?
3. If taxes are due at income tax time, do you withdraw more money than you need and place the extra in a bank account to pay for the taxes?
4. Assuming no other income, how much of a IRA withdrawal amount put you in a higher tax bracket?
5. Did you spend down your other savings first before taking IRA distributions? If so, are you not concerned about having to take a large RMD when you are 70 1/2?
6. Do you use a financial adviser to tell you when to withdraw money, which accounts to draw from, and how much to take? Investment House Adviser or an Independent Adviser?
Location: Was Midvalley Oregon; Now Eastside Seattle area
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1. you will asked to select an option to withhold, not withhold, a dollar amount withhold, a percentage withhold. No answer will result in an % being withheld as a default. Taxes will be due on 15April. Extensions apply but you'd better have estimated taxes filed. We use a their standard paper/online form.
2. Your choice.
3. Your choice.
4. Use a tax program. You can get reasonably close by using expected AGI. Be aware that SS withdrawals will impact your taxes.
5. Your choice. I try to optimize investment gains and minimize taxes. The amount of RMD is relative to you. We have specific financial products that are more RMD friendly, if we care to use them. Undecided at this time and will need to consult with tax advisor/tax program by Dec31, 2017.
6. No. Not their function and they should decline any tax advice. They may give you advice to optimize your expected investment returns in your overall investment strategy but will probably not give any specific tax advice. For instance, January there seems to be a jump in asset prices as people load up their IRAs-Which may make selling at this a advantageous time.
A strategy many recommend is converting whatever amount you need to 'fill-up your current tax bracket' to a Roth account. That will proportionately reduce your RMD's at 70-1/2 and your corresponding tax 'hit' at that time.
At this point, I've not found any way to get around 'biting the tax bullet' next year (70-1/2). However, I worked out an income/investment strategy to accommodate the added tax bills.
You did not mention your age. Assume you are retired.
Lastprime answers were good.
I would skip the advisory.
If you need tax help I would get a CPA and pay on an hourly basis.
rjm1cc---I'll be 59 this month and am retired/ not working. I struggle with what to call myself since I was suddenly out of job. I am not looking for a job and receive no outside income or assistance.
jhorton--I don't know where I would get the money from to convert my retirement savings to a Roth. My non retirement money I need to live on, since I have no income until Social Security kicks in 3 years from now if I take it early.
least prime--Is it better to have them to take out withholding, so that I would not have to pay estimated taxes? Could you or someone give me an example of what would happen if I wanted a take home money withdrawal of 40K. How much would I have to withdraw to have 40K in my pocket and have deducted the correct taxes? I assume with no income (except dividends) I would be in the lowest tax bracket.
^^ I think you can do the math on that if you know what your tax bracket is......X% more = to your tax bracket percentage, would be a VERY rough estimate. Do you itemize on your taxes?...don't forget that calculation if you do.
rjm1cc---I'll be 59 this month and am retired/ not working. I struggle with what to call myself since I was suddenly out of job. I am not looking for a job and receive no outside income or assistance.
jhorton--I don't know where I would get the money from to convert my retirement savings to a Roth. My non retirement money I need to live on, since I have no income until Social Security kicks in 3 years from now if I take it early.
least prime--Is it better to have them to take out withholding, so that I would not have to pay estimated taxes? Could you or someone give me an example of what would happen if I wanted a take home money withdrawal of 40K. How much would I have to withdraw to have 40K in my pocket and have deducted the correct taxes? I assume with no income (except dividends) I would be in the lowest tax bracket.
Go to https://www.irs.gov/uac/free-file-do...taxes-for-free and you will be able to find a free Federal income tax program. Use it to see how different choices affect your taxes. To be safe do not complete your name, ss number etc incase you hit the file key. Your state may also have a free program or one of the Federals may have a state program. If they do their is usually a charge for the state BUT only if you file the return, Thus it should be free for you.
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