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Old 08-26-2007, 06:01 PM   #21
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Has anyone come across GOOD software on how to optimize distribution? It would be very benificial to a lot us. I am primarily looking for tax efficiency.
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Old 08-26-2007, 07:14 PM   #22
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Has anyone come across GOOD software on how to optimize distribution? It would be very benificial to a lot us. I am primarily looking for tax efficiency.
It would sure be useful to me, too. Looking through Reichenstein's paper, it seems like the subject demands a fairly complicated calculator (it would need to account for the age you intend to take SS, etc. and ideally would even permit users to play with assumptions on various future tax rates on income/cap gains) . If something good is out there, it would be worth paying a few bucks for it.
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Old 08-27-2007, 08:49 AM   #23
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I plan on shifting all my qualified money to ROTH's over a ten year period before retirement.

I am pretty sure that Congress will modify the ROTH IRA so it is much less desirable in the future........
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Old 08-27-2007, 09:04 AM   #24
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I plan on shifting all my qualified money to ROTH's over a ten year period before retirement.

I am pretty sure that Congress will modify the ROTH IRA so it is much less desirable in the future........
Will you be converting enough to take you out of the 15% bracket? I think converting to the top of the 15% bracket is a no-brainer, but I'm less sure about conversions at 25%.

Cb :confused:
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Old 08-27-2007, 11:00 AM   #25
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Will you be converting enough to take you out of the 15% bracket? I think converting to the top of the 15% bracket is a no-brainer, but I'm less sure about conversions at 25%.

Cb :confused:
Let's hope that as a financial advisor he makes enough to be well out of the 15% bracket anyway.

If not, he should probably get a financial advisor.

Ha
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Old 08-27-2007, 12:09 PM   #26
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Over the weekend I just read Buckets of Money by Ray Lucia, and it has a detailed chapter covering managing withdrawals for tax efficiency. Also some good examples are given.
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Old 08-27-2007, 01:15 PM   #27
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Andy, is there a way to send an attachment in a PM?
No. It'd have to be posted as an attachment to a post-- the "Additional Options" box below the posting text box.

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... we are all likely to pay way more taxes than we figured on, even with no changes in the tax code.
I think you're making a case for either getting hammered by RMDs or for making a Roth IRA conversion.
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Old 08-27-2007, 01:48 PM   #28
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Has anyone come across GOOD software on how to optimize distribution? It would be very benificial to a lot us. I am primarily looking for tax efficiency.
ESPlanner from ESPlanner.com optimizies withdrawals to smooth out your consumption over time. It takes into account unrealized capital gains, tax-deferred accounts, SS and taxes (state & federal), so is a good tool. However, it costs $$. I found it worth the cost.

My early ER years (if that makes sense) will be funded mainly from after-tax funds, so I'm looking at a pretty low tax rate. I'm hoping to use that period to move funds from my traditional IRAs to Roth IRAs at a low tax rate.
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Old 08-27-2007, 06:00 PM   #29
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Over the weekend I just read Buckets of Money by Ray Lucia, and it has a detailed chapter covering managing withdrawals for tax efficiency. Also some good examples are given.
His recent book "Ready, Set, Retire" covers a lot more complicated retirement income planning issues. Buckets was a great starter for me.
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Old 08-27-2007, 10:37 PM   #30
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That article made my bookmarks. A very nice review of the issues involved with withdrawing assets. Unfortunately in anything involved with taxes the devil is in the details. So I think a book would be of a marginal value and almost always obsolete by the time it was published.

In general you do want 3 pools of money; a taxable account, heavily weighted with index funds, and dividend stocks, and whatever cash you need. A traditional IRA heavily weighted toward bonds and/or REITs, and Roth IRA with what ever investments you want.

As the article suggest when you are in high bracket take money from your Roth or spend cash in your taxable account. When you are in a low bracket convert money to a Roth to take advantage of the lower brackets. Assuming the tax laws remain the same (very very doubtful) you can also plays some games with Social Security and reduce you income one year to minimize the taxes on SS and then make it higher another year.

One trick worth mentioning that I just did this is year is to set up 3 separate Roth conversions. Account #1 is an individual stock #2 is a US mutual fund #3 is an Pacific ETF. At the end of the year I am going to keep one of these as Roth accounts (which ever preformed the best) and re-characterize the other two back as a traditional IRA. I'll repeat the process next year.
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Old 09-04-2007, 12:25 PM   #31
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Let's hope that as a financial advisor he makes enough to be well out of the 15% bracket anyway.

If not, he should probably get a financial advisor.

Ha
I thought he might be retired and have a fair amount of latitude wrt to realizing capital gains.

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