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Old 10-19-2013, 08:41 AM   #21
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I must be missing something, if one's living expenses are 50k like coltsfan and there is no expectation for that to rise why are we assuming there is a 25% tax rate that needs to be avoided at 70?
Once you add together SS, investment income from taxable accounts and RMDs from tax-deferred accounts that are required beginning at age 70.5 the combination can push you into the 25% bracket depending on your specific circumstances.

Arguably, not a horrible problem to have but 15% is better than 25%.
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Old 10-19-2013, 09:00 AM   #22
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Once you add together SS, investment income from taxable accounts and RMDs from tax-deferred accounts that are required beginning at age 70.5 the combination can push you into the 25% bracket depending on your specific circumstances.

Arguably, not a horrible problem to have but 15% is better than 25%.
Couldn't you then reduce the withdrawals from your taxable accounts then?

Some calculators seem to account for this, asking about your SS and when you plan to take it.


Of course, you may not want to reduce your withdrawals if you need to draw down your taxable accounts anyways, unless you want to leave a large amount of money.
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Old 10-19-2013, 09:00 AM   #23
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I must be missing something, if one's living expenses are 50k like coltsfan and there is no expectation for that to rise why are we assuming there is a 25% tax rate that needs to be avoided at 70?
I would assume that because it is possible that RMD's from IRA, SS, pensions etc could push him into that 25% tax rate as all are considered to be income.
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Old 10-19-2013, 09:46 AM   #24
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Couldn't you then reduce the withdrawals from your taxable accounts then?...
Withdrawals from taxable accounts don't affect your taxable income other than perhaps capital gains if your taxable investments have appreciated whereas withdrawals from tax-deferred accounts are generally taxable income (unless some of your contributions were not deductible).
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Old 10-19-2013, 09:54 AM   #25
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Well by the time you hit your 70s, you would expect appreciation.

You have to have a sizable retirement accounts for the RMDs to push you into 25% bracket. But I guess those could grow if you're more than a decade away from 70.5 too.
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Old 10-19-2013, 10:31 AM   #26
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Well by the time you hit your 70s, you would expect appreciation....
It depends on your AA in your taxable accounts and how often you trade/rebalance/take withdrawals.

I have been doing some selling and repurchasing to step up my basis while taking advantage of 0% LTCG taxes if you stay in the 15% tax bracket so even with the great equity market results of the last two years my basis is ~80% of value so only 20% of any withdrawal would be taxable gain.
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Old 10-19-2013, 10:42 AM   #27
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It depends on your AA in your taxable accounts and how often you trade/rebalance/take withdrawals.

I have been doing some selling and repurchasing to step up my basis while taking advantage of 0% LTCG taxes if you stay in the 15% tax bracket so even with the great equity market results of the last two years my basis is ~80% of value so only 20% of any withdrawal would be taxable gain.
So you're selling and repurchasing at a higher cost-basis?

OK so that lowers the gains on future sales but aren't you paying gains when you sell now?

As far as making sure your portfolio is eligible for LTCG, maybe stop the repurchases a year before you retire?
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Old 10-19-2013, 10:54 AM   #28
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So you're selling and repurchasing at a higher cost-basis?

OK so that lowers the gains on future sales but aren't you paying gains when you sell now?

As far as making sure your portfolio is eligible for LTCG, maybe stop the repurchases a year before you retire?
Yes, selling and purchasing the same ticker but realizing the appreciation as a gain. Wash sales for gains are ok - not for losses though. If I keep my TI in the 15% tax bracket then the LTCG get a preferential rate of 0% (rather than 15%).

The step-up in basis lowers future gains when I withdraw the money for living expenses.

I use specific identification for capital gains so I can cherry pick the purchase lots that are being sold and limt them to just those that i have held for at least a year.
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Old 10-19-2013, 08:17 PM   #29
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Is it possible to also have a strategy of pulling money out of tax-deferred up to the 15% from age 60-70?

Like if threaddstarter needs 50k annually, with std deduction + exemptions of about 18k for a couple he might have a lot of room under the 72k cliff for 25%. So if he started getting closer to retirement and realized his tax deferred was getting fat enough that it might cost him at age 70, doesn't he have a decade available to play shift funds from IRA to taxable accounts at 15%?
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Old 10-20-2013, 12:53 PM   #30
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Is it possible to also have a strategy of pulling money out of tax-deferred up to the 15% from age 60-70?

Like if threaddstarter needs 50k annually, with std deduction + exemptions of about 18k for a couple he might have a lot of room under the 72k cliff for 25%. So if he started getting closer to retirement and realized his tax deferred was getting fat enough that it might cost him at age 70, doesn't he have a decade available to play shift funds from IRA to taxable accounts at 15%?
Don't know about OP's case, but that is certainly a reasonable strategy, both before and after age 70. If you end up pulling out more than you need, you make the excess a Roth conversion.
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