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Old 03-11-2017, 05:31 AM
 
Location: Central Massachusetts
4,800 posts, read 4,850,322 times
Reputation: 6379

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agreed MJ. I only pointed out an alternative that people can look at.

But I do think that if you have that much money saved that you absolutely have to consider alternatives to spending it makes the point of saving it all a waste. You work hard, pay taxes, defer taxes, save and skimp and you get to retirement age and you are left with choices that you either have too much income or too little income and we complain.

What on earth are we doing to ourselves when all we do is cause angst in our lives?
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Old 03-11-2017, 08:47 AM
 
1,168 posts, read 2,403,210 times
Reputation: 3487
Quote:
Originally Posted by jghorton View Post
Any ideas on how to reduce or contain RMD taxes. One seems to be to convert one's 401K's/IRA's to Roth's before one's RMD's kick-in. Is there a way to get tax breaks on grandkids college, annuity payouts - or to better control one's annual tax bite? --- Many of us are interested in your successful and creative strategies.
Help me understand this- I thought contributions to ROTH'S had to be earned income- does that mean you still have to be working in order to do this?
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Old 03-11-2017, 08:53 AM
 
71,651 posts, read 71,777,271 times
Reputation: 49241
conversions can be done working or not . only new contributions require earned income
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Old 03-11-2017, 08:59 AM
 
71,651 posts, read 71,777,271 times
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Quote:
Originally Posted by oldsoldier1976 View Post
agreed MJ. I only pointed out an alternative that people can look at.

But I do think that if you have that much money saved that you absolutely have to consider alternatives to spending it makes the point of saving it all a waste. You work hard, pay taxes, defer taxes, save and skimp and you get to retirement age and you are left with choices that you either have too much income or too little income and we complain.

What on earth are we doing to ourselves when all we do is cause angst in our lives?
we all have a partner in our retirement accounts . he holds the mortgage on that money and we don't even know what we owe . that partner is uncle sam .

we have no idea what my wife will get to keep from that retirement money because we don't know what good ole uncle sams share is .

so finding a way to buy out uncle sam earlier rather than later can make for a better plan .
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Old 03-11-2017, 09:29 AM
 
1,168 posts, read 2,403,210 times
Reputation: 3487
Quote:
Originally Posted by mathjak107 View Post
conversions can be done working or not . only new contributions require earned income
awesome! thanks
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Old 03-11-2017, 10:58 AM
 
2,680 posts, read 1,544,220 times
Reputation: 2592
Don't think SPL is a good solution for most people.

In fact, most of the "solutions" for the problem just move around the point of taxation. Make bigger withdrawals sooner? Fine, except you pay the taxes sooner. Convert to a Roth? Pay the taxes now. And do it before you retire. QLAC? you just delay the taxes.

Death? That might work, but understand that your heirs will still be paying taxes and be subject to RMDs, although the rulex are complex. It will probably delay payments at least, and give them one more reason to hire an accountant for doing their taxes - there goes any benefit.
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Old 03-11-2017, 04:44 PM
 
6,353 posts, read 5,163,159 times
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Quote:
Originally Posted by LookingatFL View Post
[QLAC] There are no annual fees.
There are no separate, explicit fees, but the fees embedded in the annuity contract can be very substantial. Ask your advisor for a complete breakdown of annuity fees before buying a QLAC.
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Old 03-12-2017, 01:25 AM
 
71,651 posts, read 71,777,271 times
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the qlacs are really nothing more than cd's with a few twists but basically they are on par expense and rate wise .

the qlacs have a few differences that make them more suitable for those who want to draw an income but they really are nothing more than cd's from an insurer that as long as you don't touch self renew and you delay taxes unlike a cd until your 80's ..

unlike a cd where you cannot generally gain access to the money without penalty , the QLACS allow a distribution yearly .
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Old 03-12-2017, 03:02 AM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
22,608 posts, read 39,974,527 times
Reputation: 23749
Quote:
Originally Posted by jghorton View Post
Any ideas on how to reduce or contain RMD taxes. One seems to be to convert one's 401K's/IRA's to Roth's before one's RMD's kick-in. Is there a way to get tax breaks on grandkids college, annuity payouts - or to better control one's annual tax bite? --- Many of us are interested in your successful and creative strategies.
Yes, do ROTH conversions on any low tax obligation yr, I have been running 'tax basis scenarios since 1997. If I can keep my IRS obligation where I desire, I convert to ROTH till I hit my IRS pain thresh-hold (Different for all). Fortunately I have lots of latitude (income props) Shifted earnings and expenses, NO pension, so very manageable income timing.

If I had that much dough (RMD) (which I will never have)... I would create an LLC for my grandkids / heirs in the form of a permanent income stream. Probably a nice cash flowing commercial property or successful Franchise (Subway...). Looks like the tax law is coming back into favor of business investment. I used Section 179s during high income yrs / severance. IIRC, Section 179 (i.e. accelerated depreciation for business assets) was disbanded a couple yrs ago.

Retirement taught me a tough lesson I wish I had considered at age 18...

It's not really necessary to save a dime for retirement... just replace your income with an inflation adjusted passive income stream. The sooner the better. Age 19 would have been about right

Having recently completed another grad program, I would be hard pressed to fund a USA education for someone today. There are probably more beneficial and sustainable ways to help them learn and to become contributors to their society that a USA higher(?) learning institution. (tho there are some great ones).

Yes, you can contribute tuition directly to the institution, "For the benefit of ____ "
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Old 03-12-2017, 07:03 AM
 
Location: Ypsilanti, MI
2,447 posts, read 3,666,532 times
Reputation: 4820
What about the simple strategy of deferring SS until age 70, and drawing down your IRA's in the years between an early retirement and age 70 for your living expenses?

Yes, you will pay taxes on all withdrawals. But in an early retirement scenario this may be equal to working and being taxed on income.

Yes, you will still have RMD's but based on a lower amount.
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