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Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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There will be no RUSH to convert with tax law changes.
Most people are not such diligent planners. (many were blind-sided last yr with the tax changes... ) THAT is poor planning...
Those who are in the KNOW, know their plan. (mine is to be at 50% Roth and 50% tIRA by age 71) +/- (not Earth shaking if I miss)
My conversions change with every tax scenario. (annually).
Tho a Roth fan... No / few Roth conversions at the moment (Qualifying for ACA). I will really step up my conversions age 65 to age 70 (if tax efficient).
Roth is just one of many tools... Not the right formula for all (to convert).
My DAF is also a very nice tax tool!
Hopefully RMDs can fund a DAF within the next 20 yrs (But my RMD's are not too burdensome (single wage earner / low lifetime earnings).
QCD will work if necessary when I get REALLY old and RMD's increase. (I expect I will be very dead before I get to age 71)
Started my kids in Roths at age 12 and matched 100% of their wages until they were age 18. It was a nice start for them (>$20k by age 18), and FAFSA left their Roths intact!
I'm trying to figure out if at my age, 67yo, if it is worth it to convert some IRA funds to my Roth anymore since I need the funds for income now. (I'm living solely on my own funds until I claim SS in 2 years. Why take out IRA funds & put into my Roth if I'm just going to need money for income next year anyway?) I just have enough after tax monies at this point to pay the tax on one more conversion.
In fact it may be worthwhile to use Roth funds now to lessen my current tax bill instead. If I had known better starting out in retirement I would've kept more after tax monies around...
I guess it depends on your current tax bracket and how much traditional money you have remaining when you begin taking SS. We currently have 42K in pensions, 23K in DH SS, and 38K after tax funds. This leaves us approx 40K at the 12% bracket. It does cost us approx 500-600 in additional taxes on DH's SS, which is why we will stop conversions when I begin SS. We will still have a significant amount remaining in traditional accounts when we reach RMD age. If one of us outlives the other (DH is 5 yrs older and has some health issues), all RMD's will be at the 22% bracket and 85% of SS will be taxed. I am hoping SS 2100 Act is passed so we can continue conversions and leave heirs tax free money since neither have a pension where they work.
Btw, this proposal of Congressman Larson (D) from CT has been around for a long time, and I don't think it has any chance of passing during Trump presidency. In addition to increasing the minimum SS income, raising the SS taxability threshold to $50k (in AGI+half SS amount), and computing COLA so that it takes into account higher medical expenses of the elderly, the bill also calls for increasing SS taxes by 1.2% of all income below $130'sk (2.4% increase for self-employed people like me who pay all of their SS taxes, rather than 50% being paid by the employer... since we are our own employer), plus also the same tax on all income above $400k (right now, no SS tax is paid on income above around $130s - per Larson, there would be no SS tax on income between $130sk and $400k, but anything earned above $400k, as well as of course below $130s k, would be taxed for SS). Larson also wants to combine SS pension and disability into the same fund.
Trump people are in favor of raising minimum age when one can collect the full amount of SS to 70, which would produce roughly the same savings for SS, by decreasing SS payout for each SS recipient over lifetime (and decreasing it very dramatically for those who start collecting SS at the age of 62).
There. I personally think Trump's approach is fairer to people who work in general, while some elements of Larson's approach favor the middle-middle class (ie, people who typically do save for retirement, but cannot realistically save more than $1M), the group of people who receive the worst tax flogging in general so probably deserve a bit of a break in their old age :-). I'm a centrist and a swing voter, not married to a particular party, so would just have to think more about this if it becomes a major issue in the next election.
Secure Act has bipartisan support and it’s not even passed, why worry or debate about something that has no bipartisan support. I agree with Trump on raising SS FRA to 70. Mine is already at near 67. That’s why I’m delaying taking it. I only have to wait for 3 more years.
Secure Act has bipartisan support and it’s not even passed, why worry or debate about something that has no bipartisan support. I agree with Trump on raising SS FRA to 70. Mine is already at near 67. That’s why I’m delaying taking it. I only have to wait for 3 more years.
Well, it is not a huge factor for me either way and it would not be the only or main thing influencing my vote. I am converting my SEP IRA into Roth now no matter what (as I said, because I don't want to take RMDs when I turn 70.5 in 10.5 years). But since this Roth conversion is my main/only financial theme this year, I just tend to participate when I see Roth mentioned (although I also thought, based on the title of the thread, that it was maybe about the end of the world coming in 2020 so all ye sinners repent, ie, I just read it for its expected bizarreness sake - it turned out to be about practical finance, what do you know :-).
Well, it is not a huge factor for me either way and it would not be the only or main thing influencing my vote. I am converting my SEP IRA into Roth now no matter what (as I said, because I don't want to take RMDs when I turn 70.5 in 10.5 years). But since this Roth conversion is my main/only financial theme this year, I just tend to participate when I see Roth mentioned (although I also thought, based on the title of the thread, that it was maybe about the end of the world coming in 2020 so all ye sinners repent, ie, I just read it for its expected bizarreness sake - it turned out to be about practical finance, what do you know :-).
Same here, I’ve been doing Roth conversion. Expect I will be doing it for 14-15 years total. There is no mad rush in anything. It’s called smart financial planning.
I don’t worry about raising SS age either, but I expect it’s for much younger crowd. Not the people who are close to retirement age. Most likely will affect my kids, younger than 30.
I guess it depends on your current tax bracket and how much traditional money you have remaining when you begin taking SS. We currently have 42K in pensions, 23K in DH SS, and 38K after tax funds. This leaves us approx 40K at the 12% bracket. It does cost us approx 500-600 in additional taxes on DH's SS, which is why we will stop conversions when I begin SS. We will still have a significant amount remaining in traditional accounts when we reach RMD age. If one of us outlives the other (DH is 5 yrs older and has some health issues), all RMD's will be at the 22% bracket and 85% of SS will be taxed. I am hoping SS 2100 Act is passed so we can continue conversions and leave heirs tax free money since neither have a pension where they work.
First, congrats on being in what appears to be great financial shape! But please help me understand the sentences above... Given the context, I assume this means you are RECEIVING those amounts annually (and not that those are the total amounts you "have"). If so, you are receiving 103k per year, and indicate that "leaves you 40k at the 12% bracket."
That's the point I get confused, because current tax brackets (Married Filing Jointly) are:
$0-19,400 (for 10%)
$19,401-78,950 (for 12%)
$78,951-168,400 (for 22%)
I could well be misunderstanding, but how does $103k or $143k leave you still sitting in the 12% bracket? (I'm not questioning your circumstances... just trying to make sense of numbers, and apply them to my own planning).
Last edited by HeelaMonster; 06-27-2019 at 09:12 AM..
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) THAT is poor planning...
