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You are starting to give me the feeling that it might be worth all the effort to explore it. Just the thought of not having to worry about the tax implications of doing something with my money gives me a great deal of peace of mind. Maybe "which way means less taxes" is not the main criteria. Future peace of mind is more important. Can I live well enough with what is left? Do I qualify for food stamps so I can eat lobster like the other food stampers? LOL!
I may look into the QLAC for part of it. Move a bunch from TIRA to Roth. Get my ass to a lower taxed state. Find out how to compute the increase in Medicare premiums.
I'm still worried that I will miss something and find that it didn't work as planned.
You folks are a wealth of knowledge. Please keep commenting.
You are starting to give me the feeling that it might be worth all the effort to explore it. Just the thought of not having to worry about the tax implications of doing something with my money gives me a great deal of peace of mind. Maybe "which way means less taxes" is not the main criteria. Future peace of mind is more important. Can I live well enough with what is left? Do I qualify for food stamps so I can eat lobster like the other food stampers? LOL!
I may look into the QLAC for part of it. Move a bunch from TIRA to Roth. Get my ass to a lower taxed state. Find out how to compute the increase in Medicare premiums.
I'm still worried that I will miss something and find that it didn't work as planned.
You folks are a wealth of knowledge. Please keep commenting.
Thanks.
Pete
A current chart showing how the Part B premium increases with income level is at
You are already past the age where Medicare premiums are determined. There is a max anyway, for any given year. Your premium now must be very low, based on your original income tax numbers posted, so during the conversion time frames, it may go up. The limit in increase favors the extreme conversion, of course because its only one year. Definitely worth doing the online tax forms to estimate, or at this point pay a tax accountant. Its straightforward, and better safe than sorry ; well worth the second opinion, IMHO.
I did not select a choice in the poll. I was taught to delay paying taxes as long as possible. I was also taught that tax deductions can be your friend. We maxed out our IRA's and loved the deduction. Even now that we are taking RMD's, and they are income, I am better able to pay the taxes and do not need the deductions I once needed.
You are already past the age where Medicare premiums are determined. There is a max anyway, for any given year. Your premium now must be very low, based on your original income tax numbers posted, so during the conversion time frames, it may go up. The limit in increase favors the extreme conversion, of course because its only one year. Definitely worth doing the online tax forms to estimate, or at this point pay a tax accountant. Its straightforward, and better safe than sorry ; well worth the second opinion, IMHO.
I'd love to hear what the outcome was!
I don't understand your first sentence, although the rest makes sense to me. One is never "past the age where Medicare premiums are determined" because they continue to be determined on a year to year basis, based on income, no matter how old one is. What am I missing, or did you intend to say something else with that first sentence?
Well, the Medicare premiums don't seem to be a problem for me but nor do they increase so that is a disincentive.
If I continue with the MRD I will have my SS taxed at 85% for the rest of my life verses just one year.
Now here is where I totally blow my credibility. I don't use any tax program to do all this. I have a spreadsheet that I built back before Excel was created and I have been updating it every year since. It now has something like 30 separate worksheets to do what I need. It is at:
Now, I'm not fool enough to think this will always get me the right answer. So each year after I use these sheets to compute what I think my tax should be I then go online and see if they get the same answer. They don't but most of the differences are because I didn't answer some question correctly. Believe it or not, once I have answered the tax program questions correctly the results usually match my spreadsheets.
The advantage of the spreadsheets is you don't have to answer any questions. Just plug the numbers you want into the lines of the tax forms and instantly see the effects. It sure makes "What If" like this very easy and fast.
So I will now undertake a lot of "What If". This could take some time. If I have problems or don't understand something I'll be back here. I will also try to provide updates if anything significant comes up.
And if I actually do anything, I'll post that also.
Well, the Medicare premiums don't seem to be a problem for me but nor do they increase so that is a disincentive.
Now, I'm not fool enough to think this will always get me the right answer. So each year after I use these sheets to compute what I think my tax should be I then go online and see if they get the same answer. They don't but most of the differences are because I didn't answer some question correctly. Believe it or not, once I have answered the tax program questions correctly the results usually match my spreadsheets.
Pete
Very good idea. I think using the online programs as a check of your work is a very good idea.
I had a friend that did financial consulting(not tax). He manually did his tax return and then went to his CPA to have it done. If the two returns did not agree he reconcile. Like you, on first cut there would be some differences.
I am retired. I reached 70 this year and have begun my yearly distribution from my traditional IRAs which is pushing me into the next tax bracket. This OP and its responses have set me off on a learning curve.
Everybody's situation is different. I suffered a financial set back 15 years ago but recouped, more by luck, than making good decisions. So I have a good cash flow from SS, and some small pensions which enabled me to leave the regular savings and IRA accounts to accumulate. Again this is just luck. An illness, remarriage, social security default, whatever, and I'll need my savings to live on. So I am always looking for cost savings. Right now, the biggest sucking money monster is the federal government.
ANYWAY, my government IRA account advertises annuities as a good rollover which I have to do this year. The return it advertises is 8% which I think is too good to be true.
Anyone have annuity experience to contribute here.
Well, 8% might seem high but they could just put your whole buy-in into SPY. The long term (30 year or so) average annual gain of the S&P500 (~=SPY) is over 10% excluding dividends. So they get to keep 2% plus the dividends.
Not a bad deal for them.
BTW I prefer QQQ to SPY, more volitility. I have all my IRA's totally in QQQ because I plan to live a long time and realize the long term average.
Using this logic I see no need for an anuity except I am looking into the QLAC only to defer part of my MRD to later in life.
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Very useful Thread
