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Roth Withdrawal for New Car
Old 10-10-2019, 06:41 PM   #1
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Roth Withdrawal for New Car

I'm sixty-six and about to purchase a Tesla for around $60K.

My plan is to withdraw the money from one of our Roths so that it will not have tax consequences. The reason for that is that DW is still on Obamacare, so a big increase in taxable income would drastically reduce the subsidies.

Any reason not to do it that way?
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Old 10-10-2019, 06:56 PM   #2
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Do you have anything you can sell at a loss? If not then I think your plan is the way to go assuming you can easily afford it. Good luck.
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Old 10-10-2019, 06:58 PM   #3
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If you won’t need it for anything else, why not blow that dough?
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Old 10-10-2019, 07:04 PM   #4
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Just "bought DW" a 50k Rubicon using part of a Roth for the same reason. Go for it.
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Old 10-10-2019, 07:25 PM   #5
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Sounds good... but will you be able to get enough electricity to charge the batteries to go somewhere?
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Old 10-10-2019, 07:34 PM   #6
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What are the alternatives? All our tax planning is directed towards long-term optimization of our various income sources. Roth withdrawals are on top of that. I don't think pulling out tIRA money outside of our careful planning would be at all good. Probably all at a higher tax bracket than usual. So a Roth withdrawal sounds good to me.

The one thing that might sway me is if we had some room available in both the federal and state tax brackets such that the money comes out of the tIRA at the same tax rate as planned, and doesn't fail to fill lower tax brackets in the future.

Of course if you can use taxable account money, and capital gains aren't taxed differently than planned, that works even better. Although that would screw up our estimated taxes.
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Old 10-11-2019, 08:18 AM   #7
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Tesla, nice. 0-60 in about 2 seconds. Pay for it anyway you can to stay on ACA. We were just looking at a Camry Hybrid the other day. $60K for a car just doesn't seem worth it. But I can dream.
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Old 10-11-2019, 08:31 AM   #8
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I would do it.
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Old 10-11-2019, 09:16 AM   #9
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I have not done this but I've seen it suggested here that while on Obamacare you could borrow the needed amount with a HELOC on your house. It's not a taxable event so it would not affect your Obamacare MAGI. You'd have some interest but it would keep your money in your Roth account growing tax free. If you change your mind you could pay it off with the Roth money or wait until Lena starts Medicare and use Trad IRA money.

Now, I'm a debt averse person so I don't know if I would get a HELOC but I thought the idea was interesting in some situations.

I'm all for paying cash for cars. My last car was 3 years old and the price was around $13,000. We had the cash and used it. Love my car!

A $60,000 Tesla sounds great for you Al. Wait a minute....aren't you the guy that took a long driving camping trip in a Toyota Echo? And wrote a book about it? Did that book earn you this Tesla?

Get exactly what you want and ENJOY IT!
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Old 10-11-2019, 09:26 AM   #10
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Thanks, guys.
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Old 10-11-2019, 09:38 AM   #11
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Originally Posted by Rianne View Post
Tesla, nice. 0-60 in about 2 seconds. Pay for it anyway you can to stay on ACA. We were just looking at a Camry Hybrid the other day. $60K for a car just doesn't seem worth it. But I can dream.
Yeah especially when I paid $16k for a Camry LE with 30k miles on it. You could get 3 used Camry LEs for the price of a New Hybrid. That can't be right.
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Old 10-11-2019, 09:42 AM   #12
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I considered a TSLA but the T was a better value for our family. I do a lot of the maintenance myself and don't want to rely on a T tech to do it and then charge for it. I'm fine filling up the gas tank every week, not an inconvenience at all. The 0-60 time isn't great but who needs to go to 60 in 2 seconds? I sure dont.

IF you don't need that 60k for anything more pressing than the car, I say go for it Al! If a new roof, or some major home repairs or wedding or college costs are coming up...maybe re think.
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FIRE in 2031 @ 50yrs old (+/- 2yrs) w/ a hypothetical $2.5mil portfolio, 3 appreciated homes worth $1.0mil and rental income to fund my gap years until RMD. Assets will go to an inherited IRA where I plan on watching the investments grow until I die or the trust gets executed.
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Old 10-11-2019, 09:43 AM   #13
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Also, have you ridden in one yet for a Test drive? I know some people rent them out...do that first before buying.
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FIRE in 2031 @ 50yrs old (+/- 2yrs) w/ a hypothetical $2.5mil portfolio, 3 appreciated homes worth $1.0mil and rental income to fund my gap years until RMD. Assets will go to an inherited IRA where I plan on watching the investments grow until I die or the trust gets executed.
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Old 10-11-2019, 09:55 AM   #14
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Enjoy the car and let us know how you like!!
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Old 10-11-2019, 10:22 AM   #15
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I've ridden in my neighbor's Tesla X.

It's really an obvious choice. We want an electric car to replace our Leaf, and a range of 310 miles is great.

I pushed the button (stressful for a tightwad like me).



I was shocked that it will be delivered to our door in about two weeks.
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Old 10-11-2019, 10:26 AM   #16
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Well done Al.

There is nothing sacrosanct about the Roth money in my view. When you want to withdraw money you do it in the most cost effective way, which in your case is to pull from your Roth to avoid extra costs elsewhere.
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Old 10-11-2019, 10:28 AM   #17
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@OP - Just curious what's the wait time ?
Neighbor bought one, and at the time unless he wanted to wait another year or so, he had to upgrade to get it sooner.
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Old 10-11-2019, 10:33 AM   #18
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Congrats on the new Tesla! Looks like you're ordering a Model 3 Long Range AWD. Nice choice.
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Old 10-11-2019, 10:44 AM   #19
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@OP - Just curious what's the wait time ?
Neighbor bought one, and at the time unless he wanted to wait another year or so, he had to upgrade to get it sooner.
OP stated that it will be delivered in 2 weeks.
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Old 10-11-2019, 10:50 AM   #20
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Whoops I missed that. -Thank you Dtail
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