Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 12-03-2015, 01:40 AM   #21
Recycles dryer sheets
thefinancebuff's Avatar
 
Join Date: Dec 2008
Posts: 262
Quote:
Originally Posted by samclem View Post
I'd think it more likely that the law "keeps the promise" by not taxing any Roth withdrawals. But, instead, the amount of those withdrawals (principal and any gains--makes no difference) is added to other income to determine the individual's tax rate, to determine how much of their SS payments are taxable, to determine ACA subsidies, to determine eligibility for various other subsidies and assistance, tax bracket for Cap Gains and Dividends in taxable accounts, etc. So, the Roth withdrawal was never taxed, it just caused your other taxes to go up. That counts as "keeping the promise" in DC.
Just like muni interest, tax free, but it's included to determine MAGI for Social Security, ACA tax credit, and maybe something else.
__________________

__________________
thefinancebuff is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 12-03-2015, 06:31 AM   #22
Thinks s/he gets paid by the post
Senator's Avatar
 
Join Date: Feb 2014
Location: Eagan, MN
Posts: 3,059
Unless you have more net worth than the average member of congress, I do not think it will ever affect you.
__________________

__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
Senator is offline   Reply With Quote
Old 12-03-2015, 08:30 AM   #23
Thinks s/he gets paid by the post
mpeirce's Avatar
 
Join Date: Feb 2012
Location: Columbus area
Posts: 1,595
Quote:
Originally Posted by Ed_The_Gypsy View Post
The most serious threat to Roths I have run across is requiring RMD s for them.
+1

I actually expect this at some point.

The other threat to a ROTH is some sort of consumption tax. I doubt they'll call it a VAT, but a national sales tax applied to certain products (carbon tax anyone?) is another way to raise taxes.

I actually support a consumption tax, IFF we eliminated the income tax. The real danger is adding consumption taxes while keeping the income tax.
__________________
mpeirce is offline   Reply With Quote
Old 12-03-2015, 08:57 AM   #24
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 2,933
Quote:
Originally Posted by growing_older View Post
Whoa, whoa, whoa.

There's no "correct" about it. You are merely speculating about details of rules that have not yet been written for a concept that hasn't been raised for a future tax modification that hasn't been drafted, or in fact seriously discussed, anywhere other than in speculative articles looking for click-audience. This isn't even vapor. It's fantasy. Impossible to rule out, but way too far from reality to seriously discuss.
Sorry if it wasn't clear to you (and the site doesn't help because it doesn't quote the entire post being quoted)........this is existing law for withdrawal of earnings from Roths.
__________________
kaneohe is online now   Reply With Quote
Old 12-03-2015, 09:04 AM   #25
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,625
OK, if one accepts that there are risks to Roth money, what does one do?

A Roth is still one of the best places to avoid taxes: Contribute to a Roth without paying taxes and withdraw from a Roth without paying taxes. What's not to like about that? (And if you have to ask me how does one contribute to a Roth without paying taxes, then you are still working.)
__________________
LOL! is offline   Reply With Quote
Old 12-03-2015, 09:07 AM   #26
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,450
Also, since Congress tends to make tax changes prospectively and not retrospectively, if it seemed that there were going to be changes adverse to my interests I could just empty my Roths and put the money in my taxable accounts.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 12-03-2015, 09:14 AM   #27
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 2,933
Quote:
Originally Posted by LOL! View Post
OK, if one accepts that there are risks to Roth money, what does one do?

A Roth is still one of the best places to avoid taxes: Contribute to a Roth without paying taxes and withdraw from a Roth without paying taxes. What's not to like about that? (And if you have to ask me how does one contribute to a Roth without paying taxes, then you are still working.)
Please enlighten me........I'm not working and I don't know how you contribute to Roth w/o paying taxes..........
__________________
kaneohe is online now   Reply With Quote
Old 12-03-2015, 09:39 AM   #28
Thinks s/he gets paid by the post
sengsational's Avatar
 
Join Date: Oct 2010
Posts: 3,844
If they do make a play for a consumption tax, to be fair (they like to use the word "fair" when talking consumption tax for some unexplained reason), they would need to include a rebate based on the proportion of Roth withdrawal. RothWD/(RothWD + income). So if that formula was 1, you'd get back all the VAT you paid during the year. If it was .5, you'd get back half, for instance.

With the a above, plus complete elimination of the personal income tax, I'd support it, but this will never happen.
__________________
sengsational is online now   Reply With Quote
Old 12-03-2015, 10:50 AM   #29
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,284
Quote:
Originally Posted by LOL! View Post
OK, if one accepts that there are risks to Roth money, what does one do?

A Roth is still one of the best places to avoid taxes: Contribute to a Roth without paying taxes and withdraw from a Roth without paying taxes. What's not to like about that? (And if you have to ask me how does one contribute to a Roth without paying taxes, then you are still working.)


Yea, that is one of the things that I was taught back in college when I was taking tax courses... specifically estate planning...

The prof said that you have to do the planning with the laws that were in place at the time... if the laws change, well, sometimes you are stuck with your decision, sometimes you can change...

The thing you do not do is plan for a law that does not exist....
__________________
Texas Proud is offline   Reply With Quote
Old 12-03-2015, 10:56 AM   #30
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,450
+1 If things change then there may be a need to respond but to try to tax plan based on intuition of what will be is a fool's errand.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 12-03-2015, 11:12 AM   #31
Thinks s/he gets paid by the post
 
Join Date: Jan 2008
Posts: 1,495
Quote:
Originally Posted by pb4uski View Post
Also, since Congress tends to make tax changes prospectively and not retrospectively, if it seemed that there were going to be changes adverse to my interests I could just empty my Roths and put the money in my taxable accounts.
Quote:
Originally Posted by pb4uski View Post
+1 If things change then there may be a need to respond but to try to tax plan based on intuition of what will be is a fool's errand.
These.
__________________
Options is offline   Reply With Quote
Old 12-03-2015, 11:12 AM   #32
Thinks s/he gets paid by the post
MasterBlaster's Avatar
 
Join Date: Jun 2005
Posts: 4,359
Quote:
Originally Posted by LOL! View Post
OK, if one accepts that there are risks to Roth money, what does one do?

A Roth is still one of the best places to avoid taxes: Contribute to a Roth without paying taxes and withdraw from a Roth without paying taxes. What's not to like about that? (And if you have to ask me how does one contribute to a Roth without paying taxes, then you are still working.)
What to do

I would re-consider any Roth conversions going forward unless your marginal tax bracket for the conversion is really low.


If you have a choice of a (normal) tax-deferred 401k or a Roth 401k choose the tax-deferred option (unless your marginal tax bracket is really low).
__________________
MasterBlaster is offline   Reply With Quote
Old 12-03-2015, 11:28 AM   #33
Recycles dryer sheets
swakyaby's Avatar
 
Join Date: Feb 2011
Location: Northern Cal
Posts: 229
Quote:
Originally Posted by mpeirce View Post
+1



The other threat to a ROTH is some sort of consumption tax. I doubt they'll call it a VAT, but a national sales tax applied to certain products (carbon tax anyone?) is another way to raise taxes.

I actually support a consumption tax, IFF we eliminated the income tax. The real danger is adding consumption taxes while keeping the income tax.
I would be pretty upset if, after a lifetime of paying high income taxes, I retire and now must pay high consumption taxes instead of personal income tax.
__________________
swakyaby is offline   Reply With Quote
Old 12-03-2015, 12:01 PM   #34
Thinks s/he gets paid by the post
sengsational's Avatar
 
Join Date: Oct 2010
Posts: 3,844
You and me both. That's why they'd have to include a rebate for any Roth funds withdrawn.
__________________
sengsational is online now   Reply With Quote
Old 12-03-2015, 04:15 PM   #35
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Chuckanut's Avatar
 
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 6,335
The problem with these predictions about taxing Roth withdrawals, means testing SS, etc. is that they raise the FUD factor (fear, uncertainty, doubt). Thus, some people choose to do nothing but savings accounts and CD's paying a low rate. That's worse, IMHO, than paying additional tax in the future because one's investments have done well.
__________________
The worst decisions are usually made in times of anger and impatience.
Chuckanut is online now   Reply With Quote
Old 12-03-2015, 06:51 PM   #36
Recycles dryer sheets
Greencheese's Avatar
 
Join Date: Oct 2013
Posts: 261
I could see the government ending Roth 401K and Aftertax rollovers instead of ending the Roth entirely.
__________________
Greencheese is offline   Reply With Quote
Old 12-03-2015, 07:33 PM   #37
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by Texas Proud View Post
The thing you do not do is plan for a law that does not exist....
I wouldn't optimize my plan for a law that didn't exist. But neither should one optimize exclusively for existing laws, ignoring any potential that they could change. I don't see anything wrong with arranging things so that, no matter if the laws change or not, that there is sufficient flexibility to respond. If there are several potential "futures", I'd rather have "70%" answers for all of them than have a perfect plan if nothing changes, but be in the hurt locker if the laws are modified.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is online now   Reply With Quote
Old 12-03-2015, 08:28 PM   #38
Thinks s/he gets paid by the post
 
Join Date: Mar 2010
Location: Kerrville,Tx
Posts: 2,721
I expect that Roths will get RMD's very soon, and secondly since no taxes are due, when Inherited a roth pays out immediatly all be it the life insurance industry would object, as then the Roth could become a form of Life Insurance.
__________________

__________________
meierlde is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Understanding Derivatives - Types & Upcoming Risks Andy R FIRE and Money 5 10-15-2008 06:44 AM
Luskin: "the worst risks of the credit crisis have been averted" W2R FIRE and Money 10 03-21-2008 02:45 PM
The Unspoken Reality QT FIRE and Money 66 01-06-2008 03:58 PM
Need opinions on coverage risks and COBRA Surfdaddy Health and Early Retirement 5 09-17-2007 12:05 PM
Managed Fund Risks mickeyd FIRE and Money 65 12-01-2006 05:47 PM

 

 
All times are GMT -6. The time now is 02:59 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.