haapai
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Joined: Dec 20, 2010 20:40:06 GMT -5
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Post by haapai on Jan 1, 2020 20:34:12 GMT -5
This is off-topic, but I'd always scoffed at Roth conversions.
Today, for the first time, I took a gander at the RMD chart. Yeesus! It's been over fifty years since a a woman in my family line died before her RMDS exceeded the expected return in an account subject to them. I may have to take RMDs more seriously! Their value as a means of delaying taxation seems to evaporate sometime between the second and third spouse.
Yeah, I get that you can definitely shove what's left over and you don't need into an after-tax account, but it's still kinda shocking to see a vehicle that you'd always seen as a way of delaying taxation flip on you like that.
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tallguy
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Joined: Apr 2, 2011 19:21:59 GMT -5
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Post by tallguy on Jan 1, 2020 21:11:35 GMT -5
I posted a few days ago that I just did a large Roth conversion. My total for the last three years is $200,000 out of my IRAs into Roth that way. It was an extra $5000 or so tax hit the previous two years, and around $30,000 for this year. Because I am going to be managing my income for tax purposes going forward, it was important to me to reduce my IRA balances. My goal was to get down to $300,000 subject to RMDs by the time they hit. I wanted the RMDs at a level low enough that they would not adversely impact my income and tax planning. Due to other circumstances, I won't be converting any more after the 2019 tax year so will not get that low in IRAs unless we have a crash. It's okay, though. I will still have way more than I need while remaining income-tax-free for the next 12 years at least.
Roth conversions can be a great idea for a lot of people. Not at all something to be scoffed at for people with substantial IRA balances, but it again depends on individual circumstances.
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TheOtherMe
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Joined: Dec 24, 2010 14:40:52 GMT -5
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Post by TheOtherMe on Jan 1, 2020 21:13:08 GMT -5
My dad died in December at age 95. He began contributing the maximum to IRAs when they first came to be. He did so until he retired.
His IRA still has funds in it, which will eventually go to my sister and myself.
Up until this year, he was upset he had to take the RMD.
The RMD made on December 1, 2019 paid for his one month in a nursing home. All the others went to savings.
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Bonny
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Joined: Nov 17, 2013 10:54:37 GMT -5
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Post by Bonny on Jan 2, 2020 10:49:24 GMT -5
My dad died in December at age 95. He began contributing the maximum to IRAs when they first came to be. He did so until he retired. His IRA still has funds in it, which will eventually go to my sister and myself. Up until this year, he was upset he had to take the RMD. The RMD made on December 1, 2019 paid for his one month in a nursing home. All the others went to savings. O-T but I'm sorry to hear of your dad's passing. Based on your posts I'm sure it's a mixed bag of missing him and at the same time relief that he's in a better place.
My condolences.
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Gardening Grandma
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Joined: Dec 20, 2010 13:39:46 GMT -5
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Post by Gardening Grandma on Jan 2, 2020 11:23:18 GMT -5
So you are 50 and you don't have a 30 year career in your future?? Ask yourself - how old will I be in 30 yrs if I DON'T add a million to my account in 30 yrs. I retired over 20 yrs ago - I've added way more than a million to my account since retirement. Your account will keep doubling every 7 years after you retire.
Statements like this are incredibly irresponsible.
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Gardening Grandma
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Joined: Dec 20, 2010 13:39:46 GMT -5
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Post by Gardening Grandma on Jan 2, 2020 11:25:44 GMT -5
haapai, I like your idea of putting part into a Roth or a taxable account and just spending part on something fun. If it were me, I'd probably put the max of $7K in for the next two years and spend the $6K on something you want but could not bring yourself to spend on.
I like the KISS principle. Balanced funds with low fees. Vanguard is great for that.
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