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Re: Taxes in Retirement
Old 06-22-2005, 01:41 PM   #21
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Re: Taxes in Retirement

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Originally Posted by ESRBob
Just because your SWR is 80k doesn't mean your AGI or taxable income needs to be 80k.
Agreed. The point I was trying to make was you have to consider other taxable income during the year in which you do the Roth conversion.

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Re: Taxes in Retirement
Old 06-22-2005, 01:53 PM   #22
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Re: Taxes in Retirement

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Originally Posted by REWahoo!
Agreed. The point I was trying to make was you have to consider other taxable income during the year in which you do the Roth conversion.

REW
Got it. It does have the feeling of taking bitter mediciine. I hope that we all remember that and write congress people if need be years from now if they ever decide the want to 'have their cake and eat it too' and start taxing us a second time.

My accountant and I work out, every November, what my AGI is likely to be, and we then set about 'harvesting' the remainder of any 10% or 15% federal tax brackets by converting that amount of IRA/401k to Roth before 12/31 of that year.

For me its all about the compound interest factor -- the amount of tax you'll eventually pay during the RMD years because the IRA has grown so big during the decades it compounded, and now its all taxable at ordinary income rates.
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Re: Taxes in Retirement
Old 06-22-2005, 03:04 PM   #23
 
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Re: Taxes in Retirement

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the scary scenario where people convert to Roths and then Congress changes the rules to make them taxable,
Or replaces income tax with a national sales tax, in which case the converted Roths and all of our other after-tax savings are taxed twice. Guess that's not going to happen, though.
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Re: Taxes in Retirement
Old 06-22-2005, 03:48 PM   #24
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Re: Taxes in Retirement

I wouldnt count on it.

We'll end up with a national sales tax that gets reduced by the amount of income taxes you pay. That way you'll get it either way.
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Re: Taxes in Retirement
Old 06-22-2005, 04:14 PM   #25
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Re: Taxes in Retirement

Or maybe a national GST or VAT that is then deductible off of taxable income. One way or another they are going to try to get ahold of all that retirement money boomers are set to spend.

The new tax feature this year, where you can deduct state income tax or state sales tax, may be the beginning bricks being laid for a big old VAT.

I understand tax reform is in the air on Capitlol Hill again -- don't know if it will amount to anything but if Bush and Team don't get SS Reform for a legacy, they may try for tax reform.
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Re: Taxes in Retirement
Old 06-22-2005, 06:03 PM   #26
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Re: Taxes in Retirement

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Originally Posted by ESRBob
I understand tax reform is in the air on Capitlol Hill again -- don't know if it will amount to anything but if Bush and Team don't get SS Reform for a legacy, they may try for tax reform.
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Re: Taxes in Retirement
Old 06-22-2005, 06:08 PM   #27
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Re: Taxes in Retirement

Aflac?
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