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Yet another reason to convert to a Roth IRA
Old 02-12-2007, 02:14 PM   #1
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Yet another reason to convert to a Roth IRA

I have to admit that I have a blind spot about this situation, but maybe you know someone struggling with the problem in this FundAlarm.com post:

Working past "retirement": RMDs & taxes
"It is churlish to complain, because I am lucky to have the job I have -- and love -- & thus be in this ironic position....but
For the second year in a row my RMDs will push me into the AMT. (Remember how those tax-sheltered savings would surely be taxed at a lower rate in your "retirement"??)
If more people work longer -- as we are told to expect -- lots more folks may land in this position of taking RMDs while still employed.
I have no intention of trying to do the math, but I sometimes wonder if I would have been better off to just invest & forget tax sheltering. Another case where one can never predict the future -- or the tax code."

So... I guess that's one way to end up in a higher tax bracket when you're subject to RMDs!
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Re: Yet another reason to convert to a Roth IRA
Old 02-12-2007, 02:53 PM   #2
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Re: Yet another reason to convert to a Roth IRA

He can always ask his employer to pay him less.
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Re: Yet another reason to convert to a Roth IRA
Old 02-12-2007, 09:49 PM   #3
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Re: Yet another reason to convert to a Roth IRA

Quote:
Originally Posted by Nords
For the second year in a row my RMDs will push me into the AMT. (Remember how those tax-sheltered savings would surely be taxed at a lower rate in your "retirement"??)
I don't have huge deductions but I'm making six figures and I've never hit the AMT. Does this person really need to be working or is he working because he wants to ?

I'm curious as to how many of us here have ever entered the dark hole of the AMT ?
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Re: Yet another reason to convert to a Roth IRA
Old 02-12-2007, 09:53 PM   #4
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Re: Yet another reason to convert to a Roth IRA

I don't understand how RMDs are pushing him into AMT.

I have realized capital gains that push me into AMT, but RMDs are not those.

Perhaps he's in one of those states where he has a bunch of deductions that are not allowed under AMT rules? That's perhaps more likely.

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Re: Yet another reason to convert to a Roth IRA
Old 02-13-2007, 07:46 AM   #5
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Re: Yet another reason to convert to a Roth IRA


In the "Improving Your Retirement" section at Morningstar there is an interesting 3 part series about managing your IRA. Here is part 2. The Roth.





http://news.morningstar.com/article/...&pgid=wwhome1a
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Re: Yet another reason to convert to a Roth IRA
Old 02-13-2007, 07:59 AM   #6
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Re: Yet another reason to convert to a Roth IRA

We would have been paying AMT for the last few years, except
(a) We don't live in NY, MA or CA where the state income taxes are high
(b) We don't have an expensive home, so mortgage interest and property taxes are not outrageous deductions
(c) Do extra kids count? We only have a couple.

This year we may owe for the first time AMT (less than $100). OTOH, I think that just means our regular taxes are high all by themselves. OTOH, our overall income tax rate is about 16% this year.
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