bobandsherry
Thinks s/he gets paid by the post
- Joined
- Nov 24, 2015
- Messages
- 2,692
Looking for input - WWYD
I'm in third year of FIRE, been managing my MAGI with pulling out cash from after tax money (equities), staying below 400% level. Keeps me in a good position for ACA and taxes paid.
With markets near an all time high, I've been looking at options. Part of me says just hold the course, but another part says recognize gains and park some cash in CD or other non-equity position. I have a big chunk of my retirement dollars parked in 401K and cash pension that's earning 4.5% minimum rate. I will manage those payouts over the next 13 years until I hit the 70.5 year old mark so I won't have to worry about RMD hit.
So below are options to consider. As there are some brighter minds than me here, I thought I'd float this and as What Would You Do (WWYD)?
Other things I've consider. Depending on how 2020 goes, who knows what tax rates may be or how LTCG. Even current administration may suddenly feel the need to tax LTCG as ordinary income. I have access to my 401K, no penalty for withdrawals due to Rule of 55 when I FIRE'd. So I'll take some distributions from that over the course of the next 8-12 years when I decide to take SS. But distribution levels will be managed to stay below the FPL 250% level (or lower).
Maybe there's something I'm not considering. So looking for input from brighter minds as to what may be best way to play this. So.... WWYD?
I'm in third year of FIRE, been managing my MAGI with pulling out cash from after tax money (equities), staying below 400% level. Keeps me in a good position for ACA and taxes paid.
With markets near an all time high, I've been looking at options. Part of me says just hold the course, but another part says recognize gains and park some cash in CD or other non-equity position. I have a big chunk of my retirement dollars parked in 401K and cash pension that's earning 4.5% minimum rate. I will manage those payouts over the next 13 years until I hit the 70.5 year old mark so I won't have to worry about RMD hit.
So below are options to consider. As there are some brighter minds than me here, I thought I'd float this and as What Would You Do (WWYD)?
Option #1 - Continue along the path I've been on, keeps me subsidized and can continue to manage this way for several more years. I'd continue to fit within the FPL 400% level, in a BRONZE plan. This is costing me about $5-6K a year in co-pays and out of pocket costs.
Option #2 - Essentially hit reset on large portion of portfolio (non-retirement funds). Recognize a sizable portion of my unrealized LTCG this year, bite the bullet on the Excess Advance Premium repayment. As the EAP would be a pretty significant hit (I estimate it's around $17K) I figure might as well push this to a sizable chunk, realize $150-200K in LTCG to ease the sting and make it worthwhile.
Perhaps I'm not looking at this right, or maybe I am, but by recognizing the hit this year I'd be able to "better" manage my MAGI, most likely to FPL 250% or lower and could then get into a lower priced SILVER plan that also has lower OOP and co-pays. I'll save on the OOP costs over the next few years, perhaps more than offsetting the EAP and tax hit.
I look at this EAP hit may be softened somewhat by the fact that I could get out of the market, re-evaluate and revised my investment strategy a bit differently for the short term to see how things play out politically, so if market dropped I'd have basically offset (trading taxes for losses in portfolio). I know, market can also go up - and that's why I continue to keep a good portion in equities.Option #2 - Essentially hit reset on large portion of portfolio (non-retirement funds). Recognize a sizable portion of my unrealized LTCG this year, bite the bullet on the Excess Advance Premium repayment. As the EAP would be a pretty significant hit (I estimate it's around $17K) I figure might as well push this to a sizable chunk, realize $150-200K in LTCG to ease the sting and make it worthwhile.
Perhaps I'm not looking at this right, or maybe I am, but by recognizing the hit this year I'd be able to "better" manage my MAGI, most likely to FPL 250% or lower and could then get into a lower priced SILVER plan that also has lower OOP and co-pays. I'll save on the OOP costs over the next few years, perhaps more than offsetting the EAP and tax hit.
Other things I've consider. Depending on how 2020 goes, who knows what tax rates may be or how LTCG. Even current administration may suddenly feel the need to tax LTCG as ordinary income. I have access to my 401K, no penalty for withdrawals due to Rule of 55 when I FIRE'd. So I'll take some distributions from that over the course of the next 8-12 years when I decide to take SS. But distribution levels will be managed to stay below the FPL 250% level (or lower).
Maybe there's something I'm not considering. So looking for input from brighter minds as to what may be best way to play this. So.... WWYD?