Steps/Moves: Lower Tax Rates for Next 4 Years

[capjak]

Based on the election promises, I would expect that tax rates will be going down for the majority of us. As a result I was wondering what steps might be good to take assuming that rates will be lower for at least 2+ years? Assuming Retirement in 2017 and/or 2018?

Roth conversion?
Capital Gains?
Deferred Compensation?

 

[GrayHare]

If income tax rates are going to drop (which is anything but certain of course): postpone Roth conversions, take capital losses now, delay income.

 

[Al in Ohio]

I highly doubt we see any changes. Most election promises are not kept unless you are an interest group who can afford a lobbyist to keep the pressure up.

 

[rodi]

I will start the planning and speculation when the legislation is being put up for a vote in the house or senate. Until then it is vapor-law.

 

[capjak]

Agree until the law is implemented/voted on it would be hard to predict. I only have a 2 year window to retirement, so maybe do nothing as elections/choices for delayed comp are determined in December for the next year. 401k changes can occur throughout the year.

Also I am fortunate to have a pension with several choices (increased payments until 62, 100% joint, 50% etc...) finding the decisions very complex even without any potential tax changes.

My assumption has always been as the debt increases, retirement SS increases, taxes will have to increase. Thus making a Roth conversion a priority, i.e. taxes in future will be higher (remember I have a pension so my tax esp with RMD may be similar to pre retirement I believe).

 

[W2R]

I will start the planning and speculation when the legislation is being put up for a vote in the house or senate. Until then it is vapor-law.

+1000

 

[braumeister]

Jason Zweig hit the nail on the head in his WSJ column yesterday. The whole thing is worth reading, but behind a paywall so I'll just quote a few bits:

The word “clearly” is the first reflex of prediction scoundrels pretending that they foresaw what would happen in order to cover up their abject failure to forecast what did happen.
...
the insidious word “clearly” makes you nod in agreement, creating the sense that you, too, have touched that comforting crystal ball that the pundit is holding.
...
Now more than ever, successful long-term investing is about self-control. The same punditocracy that predicted that Secretary Clinton would “clearly” win is no more likely, just one day later, to know what will “clearly” happen in the economy.

 

[MichaelB]

Jason Zweig hit the nail on the head in his WSJ column yesterday. The whole thing is worth reading, but behind a paywall so I'll just quote a few bits:

Clearly

I will start the planning and speculation when the legislation is being put up for a vote in the house or senate. Until then it is vapor-law.

+1000

+1001

 

[DrRoy]

I would not do anything until the change is on the books.

 

[MuirWannabe]

Sometimes threads like this just seem like a veiled attempt to want to talk politics.

 

[LOL!]

If income taxes go any lower, then the IRS will be paying me to make my tax rate go negative. I just don't see that happening.

 

[foxfirev5]

I can't speculate so I'm sticking to my plan of maxing out the 15% bracket with IRA distributions. At this stage I'm going the CD ladder route with extra cash while maintaining my 40/60 equity/bond allocation.

 

[capjak]

Sometimes threads like this just seem like a veiled attempt to want to talk politics.

I almost put a disclaimer in stating please totally disregard my question and talk politics but who knew it wasn't even needed....

 

[Closet_Gamer]

If tax rates move substantially, those still working need to reconsider their deferred comp approaches.

 

[FUEGO]

If income taxes go any lower, then the IRS will be paying me to make my tax rate go negative. I just don't see that happening.

It happened to me for a few years (kids were involved).

 

[W2R]

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[Another Reader]

I don't think we will know what any of the new administration's policies, including tax policies, will be until a cabinet is chosen and we start hearing from them and the congressional leadership. My concern right now is the increasing interest rates that will affect the economy and our wallets. Changes I make today are in reaction to that, not what may or may not happen politically.

 

[Hamlet]

If income taxes go any lower, then the IRS will be paying me to make my tax rate go negative. I just don't see that happening.

Tax credits can do that

 

[Senator]

I will not fire until I see the whites of their eyes...

If and when changes happen, make your changes then. Have a list of options. Capital gains harvesting, Roth conversions, selling RE, etc.

 

[HFWR]

I don't anticipate a meaningful lowering of my tax rate...