Higher than expected taxes, what to do

[audreyh1]

The first thing I do when doing my annual withdrawal early January is to set aside the taxes that I expect to during the new year. This goes into a high yield savings account and is thus not invested in longer instruments. By the end of December I have a pretty good idea of what taxes I will have to pay is as I’ve already done the work in Nov and Dec to stay within a certain IRMAA level. A few tweaks in Feb/March when we prepare the final return.

 

[RetiredHappy]

Why keep your spare change in a checking account paying nothing? Discover Savings is paying 4.25% per year and Capital One 360 Savings is paying 4.35%.

We do banking with BOA and get extra cash back when you keep $100K at BOA or if you have ML Wealth Mgmt. We were with ML Wealth Mgmt but no longer. So we just keep $100K at BOA. Since we have very high expenses, we also get lots of cash back $.

 

[pc95]

I keep $100K in my checking account to take care of lumpy expenses. We have too many of those.

Whoa.....very lumpy

 

[Dtail]

Why keep your spare change in a checking account paying nothing? Discover Savings is paying 4.25% per year and Capital One 360 Savings is paying 4.35%.

We do banking with BOA and get extra cash back when you keep $100K at BOA or if you have ML Wealth Mgmt. We were with ML Wealth Mgmt but no longer. So we just keep $100K at BOA. Since we have very high expenses, we also get lots of cash back $.

Why not just use ML similar to Fidelity for example? Park 100k in a brokered CD at ML which you DIY and then you can still use an online bank for the lumpy expenses, whereby you can transfer to BOA checking when needed.
I use this concept for my mom.

 

[ShokWaveRider]

Why keep your spare change in a checking account paying nothing? Discover Savings is paying 4.25% per year and Capital One 360 Savings is paying 4.35%.

Because for some convenience is worth more than a little bit extra return. We keep our slush fund in MM but that is us. I am happy with a 2 day wait for it if needed. But our regular monthly SS, pension and interest income pays for everything we need and then some, including a few of the occasional lumpy expenses.