These last 5 posts have me doubled up.
Maybe he thinks they should go on the Blow that Dough thread!Why is that?
I can make coffee with 2 minutes effort. Starbucks is at least 10 minutes. Starbucks is not worth 8 minutes of my life.
So here is my pickle (and yes, everyone's situation is different)... my investments (and any SS I get at 70) will be the only resources to feed me and DW in retirement. My assets are split roughly 50/50 taxable and tax deferred. We are planning on a pretty fat withdrawal rate, which includes certain "constants" for taxes. After getting into the weeds with some calculators that take into account taxes, I have determined I can live off my taxable accounts just fine until RMDs hit (currently 56). Between return of capital/capital gains/interest, my taxes would be minimal until 72. If I take this approach, I get smacked in the face hitting the highest tax brackets for most of the RMD years, yet still, most of the calculators show me doubling my NW in the end. So, should I really care about RMDs? Maybe we have another President when I turn 72 who implements a similar tax policy like we have today? While legacy is not a big part of my plan, there will almost assuredly be a pot there for my kids in the end. I have looked at Roth conversions and/or strategic 401k withdrawals up to say the 24% bracket, but that sure looks less appealing short term compared to almost no taxes by pulling from my taxable accounts early on. At this point, I have somewhat settled on pulling a set amount annually from my 401K account up to a certain tax bracket threshold with the balance coming from taxable, but still wondering if I should really care about the looming RMD impact?
How much does the fear of RMDs affect your Roth conversions/401K withdrawal strategy?
Have any of you hit RMDs and having remorse for not taking a more aggressive approach before then?
DH and I are neck-deep in RMD world. This year RMDs are suspended. I am converting as much as I can while staying in the 22% bracket because I believe that income tax rates will increase in the foreseeable future. ...
Have any of you hit RMDs and having remorse for not taking a more aggressive approach before then?
I have withdrawn enough from MMs and stock funds for 2021 Spending, 2020 Taxes, HSA, and kids tuition payment. So, the $75,800 is a great amount to be able to withdraw while in the 12% bracket.
Is there anything else or another view I need to take before making the Roth Conversion?
Yes. You're likely overdoing the analysis. Would it really be significant if your Roth conversion brought you slightly into the next tax bracket? Hitting one of the cliffs, like one of the IRMAA cliffs, can be a big mistake because a small marginal change in income can result is a large tax expense. But having a few bux go into the next tax bracket wouldn't be such a big deal, IMHO.
I've been trying to narrow in on my maximum Roth conversion while staying in the 12% bracket, for a while now and it's getting pretty close to crunch time.
I don't currently have or use the ACA, SS, Pensions, and no worries about IIRMA.
My wife has funded an HSA, with $8,100, still two kids on the policy, I'm on Medicare.
I have entered all our data in to DinkyTown 1040 Calculator, Ordinary and Qualified Dividends, Short term and long term gains, HSA. I then rocked the IRA withdrawals amount back and forth until I drop into the 12% bracket. The withdrawals I can make (and Roth convert) is $75,800 and still stay in the 12% bracket.
I have withdrawn enough from MMs and stock funds for 2021 Spending, 2020 Taxes, HSA, and kids tuition payment. So, the $75,800 is a great amount to be able to withdraw while in the 12% bracket.
Is there anything else or another view I need to take before making the Roth Conversion?
Time2, this is exactly the process I went through last year and this year. I have a small pension so the withdrawals I can make and spend or Roth convert is about $72,000 in the 12% bracket. Unfortunately I "have" to spend most of that so I only ended up converting around 22K to Roth this year.
Only 5% of my retirement nest egg is in Roth, the rest is all tIRA/401k. Unless I start going into the 22% bracket for conversions I won't make much of a dent... I just can't decide to do it...
But it is nice to have a little bit of money that the tax man won't get when I'm 72.
Because future tax rates are unknown, and you'll then be in a higher tax bracket, you should absolutely be concerned, not about RMDs, but the tax bracket you'll be in when RMDs hit.So, should I really care about RMDs? Maybe we have another President when I turn 72 who implements a similar tax policy like we have today? While legacy is not a big part of my plan, there will almost assuredly be a pot there for my kids in the end. I have looked at Roth conversions and/or strategic 401k withdrawals up to say the 24% bracket, but that sure looks less appealing short term compared to almost no taxes by pulling from my taxable accounts early on. At this point, I have somewhat settled on pulling a set amount annually from my 401K account up to a certain tax bracket threshold with the balance coming from taxable, but still wondering if I should really care about the looming RMD impact?
How much does the fear of RMDs affect your Roth conversions/401K withdrawal strategy?
Have any of you hit RMDs and having remorse for not taking a more aggressive approach before then?
I've been trying to narrow in on my maximum Roth conversion while staying in the 12% bracket, for a while now and it's getting pretty close to crunch time.
I don't currently have or use the ACA, SS, Pensions, and no worries about IIRMA.
My wife has funded an HSA, with $8,100, still two kids on the policy, I'm on Medicare.
I have entered all our data in to DinkyTown 1040 Calculator, Ordinary and Qualified Dividends, Short term and long term gains, HSA. I then rocked the IRA withdrawals amount back and forth until I drop into the 12% bracket. The withdrawals I can make (and Roth convert) is $75,800 and still stay in the 12% bracket.
I have withdrawn enough from MMs and stock funds for 2021 Spending, 2020 Taxes, HSA, and kids tuition payment. So, the $75,800 is a great amount to be able to withdraw while in the 12% bracket.
Is there anything else or another view I need to take before making the Roth Conversion?
They're collectively quite humorous to me.Why is that?
That's not hard for me either as I rarely wear sox.Had to laugh at this. My coffee is done before I even get my shoes and socks on in the morning. That's starting the pot before I sit down to put them on. $8 a cup? NUTS!
Which is why if you do QCD's, put them off till next year when you'll have RMD's that the QCD's can offset.DH and I are neck-deep in RMD world. This year RMDs are suspended. I am converting as much as I can while staying in the 22% bracket because I believe that income tax rates will increase in the foreseeable future. I pay income tax out of our checking account, not out of IRA money to maximize the benefit.
Once RMDs kick back in I can convert only in excess of our RMDs. Ouch!
They're collectively quite humorous to me.
Do I understand this correctly. By example, if my RMD w/o setting up a QCD at say age 72 is $500K, then I pay taxes on the $500K. If I set up a $100K QCD, then I pay taxes on $400K? In both cases, $500K comes out of my account.