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Controlling Your Annual Income
Old 11-08-2013, 10:35 AM   #1
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Controlling Your Annual Income

At retirement, most of my funds will be in tax deferred accounts like 401K, ESOP, etc. So in essence I can basically control how much my annual income amounts to based on when I withdraw the money. I could take 2 years worth in one year and none in the next, for example.

I did a quick search, and did not see any threads on this, but I am guessing many on this board have good experience in this area.

Certainly, with the new laws I could see someone manipulating their income to get healthcare subsidies for a given year. My question is what other types of things can one consider to make the most out of the situation?

For example, how much could a person get in tax credits if they had no income for the year? Also, I imagine you want to draw out the most income you can offset given the write-offs you have in a given year. Also in the back of my mind, I am thinking it would be great to get to a situation where you have a lot of your funds in a Roth IRA, and not paying taxes on the interest or withdrawals. But I am not sure the best way to get there tax-wise. I know it always comes down to the Math, but I am trying to get a feel if I might be missing anything for consideration.

Any thoughts?

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Old 11-08-2013, 11:07 AM   #2
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There are quite a few discussions on this site about the topic, but I don't have a specific one or two at hand to reference for you.

The puzzle got more complicated now since controlling income effects the level of healthcare subsidies.

I know that a lot of folks Roth convert up to the top of the 15% bracket with an eye to managing smaller RMD's later on.

If you run i-orp, you can see which accounts it pulls from, and that can be instructional. It seems to delay pulling from Roths, which seems smart since the compounding there comes out tax free.

I don't see too many discussions about tax credits. Maybe that's because you get 'em or you don't, but not much control except for the income cutoff, I guess.

Some folks here have the "problem" of needing to spend too much money to keep in low brackets and get subsidies. That will be me later on, after I've been retired 4 or 5 years and have gone through my after tax assets. That is to say I'm heavily weighted in TDA's, more so than 'usual' since I converted regular assets to retirement assets to enable college financial aid to kick-in.

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Old 11-08-2013, 03:12 PM   #3
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I look at the savers credit too. We keep our monthly expenses at $2-2500/mo. Our income is somewhat controlled by Inc's at the end of the year.

I've heard Obamacare doesn't look at this, but the savers credit does, I think. Not sure of any other credits for low / controlled income.
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