Everyone is so helpful on this forum and I have learned so much reading through the posts over the years!
I am 34, DW and I have a 2 year old and another baby on the way.
Combined we earn around $135/year. I no longer have any 401k options at work but have maxed out my Roth IRA every year and we own 3 rental properties(with mortgages). My DW works for a university where she is able to take advantage of a tax deferred 401k(might actually be a 403b?). We recently learned that she could also open up a tax deferred 457 plan too...and she does not have a traditional or roth ira. We also do not have a coverdale or 529 setup yet for kids college.
My question would be that with child tax credit phase out at $110, investment real estate losses phase out at $100k, and a lower tax bracket at $72,500 would it make sense to invest as much in pretax/tax deferred as possible? (I could do traditional instead of Roth, DW could max 457 and maybe open up a traditional if allowed, on top of her 403b?) I don't think we could get to $72,500 but every dollar towards it would be an automatic 10% savings if we withdraw while we are in lowest tax bracket in retirement right? or is my logic way off? I would then like to at least max out a coverdale for college.
Part 2 of question is if we tried to retire at age 50. How would you recommend withdrawing funds to stay in lowest tax bracket and cover expenses? (Live off rental cash flow and tax deferred accounts only pulling out enough to stay in lowest tax bracket? Sell a property in separate years or 1031 into one multi property we then live in for 2 years and then sell? Then pull our Roth money after 59.5 for big purchases or vacations?
Please let me know all the things I'm not thinking about and where I may be horribly off base. I'm just trying to plan and in the past we have tried to save money for rental properties but now I feel like we may have missed out on some tax savings. I still think rental property opens up a lot of options and could stick to that plan as well? I'm all over the place, help please
I am 34, DW and I have a 2 year old and another baby on the way.
Combined we earn around $135/year. I no longer have any 401k options at work but have maxed out my Roth IRA every year and we own 3 rental properties(with mortgages). My DW works for a university where she is able to take advantage of a tax deferred 401k(might actually be a 403b?). We recently learned that she could also open up a tax deferred 457 plan too...and she does not have a traditional or roth ira. We also do not have a coverdale or 529 setup yet for kids college.
My question would be that with child tax credit phase out at $110, investment real estate losses phase out at $100k, and a lower tax bracket at $72,500 would it make sense to invest as much in pretax/tax deferred as possible? (I could do traditional instead of Roth, DW could max 457 and maybe open up a traditional if allowed, on top of her 403b?) I don't think we could get to $72,500 but every dollar towards it would be an automatic 10% savings if we withdraw while we are in lowest tax bracket in retirement right? or is my logic way off? I would then like to at least max out a coverdale for college.
Part 2 of question is if we tried to retire at age 50. How would you recommend withdrawing funds to stay in lowest tax bracket and cover expenses? (Live off rental cash flow and tax deferred accounts only pulling out enough to stay in lowest tax bracket? Sell a property in separate years or 1031 into one multi property we then live in for 2 years and then sell? Then pull our Roth money after 59.5 for big purchases or vacations?
Please let me know all the things I'm not thinking about and where I may be horribly off base. I'm just trying to plan and in the past we have tried to save money for rental properties but now I feel like we may have missed out on some tax savings. I still think rental property opens up a lot of options and could stick to that plan as well? I'm all over the place, help please