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I am looking for advice on the best way to take advantage of the 15% tax bracket that I will be in for 2012 (and probably 2013).
Background – Single head of household, DD (turns 23 soon) in college FT, should complete Fall 2013. I have about $13K in “headroom” before moving the 25/28% for 2012 and 2013. My 40K cash is about 5% of my AA but only earning 0.5% interest at the CU.
I need about 13K more than my dividends (that I am rolling over) and pension provide to cover her education (she does work P/T, but that goes to gas, cosmetic, clothes, entertainment… ). I am also looking at a kitchen remodel (prepping house for sale in 2014) and possibly new or newer more reliable car. I do like to keep 30-40K in easy access cash.
The options I see are as follows:
1. Pull money out of 401K (tax only no 10% penalty). Actual my megacorp 401K is not all the great and I have already moved quite a bit to IRA Vanguard accounts.
2. Utilize the fairly low rate Govt. backed loans at about 2% that are available $11K for 2012 school year (fall/spring) And transfer ~13K from Traditional IRA to Roth IRA.
3. Withdraw funds as needed from after tax accounts and do the Traditional IRA to Roth IRA.
I am actually leaning towards option 1 because it is the least complicated and the amount of dollars involved is only moderately significant. Even though I believe the loan (Stafford loan?) seems to make the most financial sense. Anyway I plan to take advantage of the 15% Fed tax bracket I will be in this year and 2013 one way or another. After that it becomes OBE.
Any advice or options I missed would be much appreciated.
Thank you in advance
Background – Single head of household, DD (turns 23 soon) in college FT, should complete Fall 2013. I have about $13K in “headroom” before moving the 25/28% for 2012 and 2013. My 40K cash is about 5% of my AA but only earning 0.5% interest at the CU.
I need about 13K more than my dividends (that I am rolling over) and pension provide to cover her education (she does work P/T, but that goes to gas, cosmetic, clothes, entertainment… ). I am also looking at a kitchen remodel (prepping house for sale in 2014) and possibly new or newer more reliable car. I do like to keep 30-40K in easy access cash.
The options I see are as follows:
1. Pull money out of 401K (tax only no 10% penalty). Actual my megacorp 401K is not all the great and I have already moved quite a bit to IRA Vanguard accounts.
2. Utilize the fairly low rate Govt. backed loans at about 2% that are available $11K for 2012 school year (fall/spring) And transfer ~13K from Traditional IRA to Roth IRA.
3. Withdraw funds as needed from after tax accounts and do the Traditional IRA to Roth IRA.
I am actually leaning towards option 1 because it is the least complicated and the amount of dollars involved is only moderately significant. Even though I believe the loan (Stafford loan?) seems to make the most financial sense. Anyway I plan to take advantage of the 15% Fed tax bracket I will be in this year and 2013 one way or another. After that it becomes OBE.
Any advice or options I missed would be much appreciated.
Thank you in advance
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