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Old 12-31-2017, 02:10 PM
 
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Its a quandary for us. Most of our retirement is in tIRA. We were all set to move money from it to ROTH for next 6 years till RMDs take effect, but it would affect the ACA subsidy we finally qualify for. (DHs income plus ROTH would push us over income limit). I know, though, that once we take RMDs plus SS and any income our investments produce well be hit hard. A quandary for sure
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Old 12-31-2017, 05:31 PM
 
Location: Grove City, Ohio
10,133 posts, read 12,385,819 times
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Quote:
Originally Posted by mathjak107 View Post
yes , you can have taxes withheld from ss . it is a separate form you have to fill out and is not an application option . it is on the irs website . link is posted


we just filled out the forms and sent them in and taxes are now withheld. you specify a percentage.

https://www.irs.gov/pub/irs-pdf/fw4v.pdf
What I did, or will do in January, is have my employer take out an extra $100/week which should cover it.

Everyone is different so there are no right or wrong answers but this might help.

A quick and easy online utility:

How much of my social security benefit may be taxed?

Quote:
Did you know that up to 85% of your Social Security Benefits may be subject to income tax? If this is the case you may want to consider repositioning some of your other income to minimize how much of your Social Security Benefit may be taxed and thereby, maximize your retirement income sources.
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Old 01-01-2018, 02:45 AM
 
71,563 posts, read 71,730,589 times
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i have been dealing with estimated taxes for 15 years now . starting for 2018 i sent that form to social security for both of us , and my wifes pension provider .

only thing i will have to worry about is the dividends ,distributions and interest from investments . this year they were very high at over 50k . but at least everything else is covered .

i always hate writing checks for so much for the estimated so i am trying to get as much withheld as i can .

it would be nice if the brokerage could withhold but i don't see an option .
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Old 01-01-2018, 07:38 AM
 
Location: Central Massachusetts
4,800 posts, read 4,847,776 times
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Quote:
Originally Posted by saralvr View Post
Its a quandary for us. Most of our retirement is in tIRA. We were all set to move money from it to ROTH for next 6 years till RMDs take effect, but it would affect the ACA subsidy we finally qualify for. (DHs income plus ROTH would push us over income limit). I know, though, that once we take RMDs plus SS and any income our investments produce well be hit hard. A quandary for sure
Your Roth income is not part of your equation. I cannot help you on all your other sources but the Roth will not add to your tax burden.

I think you are doing it right though getting some converted to Roth over the next 6 years. So whichever tax bracket you are in convert up to the upper end of that bracket or to however much you can afford to pay the tax on. Pay the tax out of pocket on the conversions. It allows for the best results in the investment.
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Old 01-01-2018, 08:29 AM
 
Location: Charleston, SC
1,362 posts, read 767,246 times
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Quote:
Originally Posted by saralvr View Post
Its a quandary for us. Most of our retirement is in tIRA. We were all set to move money from it to ROTH for next 6 years till RMDs take effect, but it would affect the ACA subsidy we finally qualify for.
The ACA Subsidy is worth a nice chunk of change. If you go over the MAGI Limit and have to pay that back.....that could be a whopper. That would wipe out any savings the Roth Conversions would provide.

I think as long as ACA is available, we are going to work hard on managing our MAGI under $64K by all means.
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Old 01-01-2018, 08:51 PM
 
6,620 posts, read 3,748,154 times
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Quote:
Originally Posted by mathjak107 View Post
No ,it is because if you have no other income besides Roth , cash set a side and pulling out up to 40k from Ira money will leave you with very little taxable income . Taking ss will leave you much higher and you lose the ability to take much from iras with just the standard deductions and exemptions offsetting income
I would think that the Roth is the last thing you want to withdraw, since it's accumulating gains tax free? First to contribute to, last to withdraw?
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Old 01-02-2018, 02:56 AM
 
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mathematically there is no difference between the traditional or a roth assuming same contribution amounts and returns . any differences will be based on personal situation , not because one grows tax free but has the taxes prepaid up front and one pays taxes after .

it seems the roth should do better but it really does not .

lets take a 401k where we can even up the numbers .

5k in a roth 401k in pre tax dollars is actually going to be 6667.00 in pretax dollars in the traditional in the 25% bracket .

you are prepaying the taxes in the roth so it is not apples to apples unless you even up the pretax dollars .

you can't pay the taxes from outside money on the roth but then try to pay the taxes on the traditional with money from within .


so lets suppose markets double over time .


the roth will grow to 10k , the traditional grows to 13,334.00 . take off the 25% tax and you got the same 10k .

magic isn't it ? ha ha ha .

in our minds we assume the tax freeness of the roth is better gain wise , but we forget we prepaid the taxes with money that could have been invested too
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Old 01-02-2018, 09:27 AM
 
930 posts, read 827,412 times
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Quote:
Originally Posted by mathjak107 View Post
in our minds we assume the tax freeness of the roth is better gain wise , but we forget we prepaid the taxes with money that could have been invested too
Well, the big assumption is that the TP would be disciplined enough to actually invest this money, and invest it wisely.

Also, your tax profile can change a lot over the years. Back when I was working I had dependents and filed jointly. Now I'm single and retired with no dependents and a lot more taxable income than when I was working (thanks to the pension, the 401(k), Soc Sec, and an IRA). I would have done a lot better investing in a Roth (because my taxable income was already lowered) rather than a conventional IRA. It's all very tricky!
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Old 01-02-2018, 09:48 AM
 
71,563 posts, read 71,730,589 times
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the assumption is it is choosing between a roth or traditional early on in a career . other than that no assumption about a thing . no matter what they do with the money the same return and same dollars will yield the same results despite the tax free ability on the roth .

don't forget as your pay gets high and higher and you get older those dependents vanish , eventually the 401k deduction vanishes , so a lot of deductions you had when working vanish in retirement . the house may be paid off , perhaps a low or no tax state is your home , real estate taxes are less .

so you have to be very careful trying to compare .you may find your deductions made your working years lower than retirement brackets.

to many assume brackets will be lower in retirement but that may not be the case for a lot of reasons .
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Old 01-07-2018, 07:37 AM
 
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Remember at 70 you will need to use your Ira. Roth you do not. I've ran the numbers and for use at 70 if we don't do the Roth we will have to pay tax on about $180000+ and that will go up every year.. If we move to a Roth our tax bit will be around 12%. Plus that Roth money is growing tax free or I can give it to my kids tax free. We live now on $60000 so in 5 years we will get hit with taxes on $180000.
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