RMD 3 card Monte??

[jerseygirl]

Sept 13, 2024 11:20:34 GMT -5 minnesotapaintlady said:

Sept 13, 2024 10:52:41 GMT -5 jerseygirl said:

If you work after 70 and amount was more than one of your previous low years, then your SS amount should increase
I had a consulting business after 70 and my SS increased every year

But you still CLAIM at 70 correct?  

There is no more 8% annual increase after that point and the adjustment due to current wages replacing past lesser wages happens annually even after starting your payments.

Yes I claimed at 66, but my SS increased yearly as I was making more money each year. In fact I made the most I ever made at 75 and SS increased
SS won’t increase after 70 if you’re retired or dont make more than one of your low earning years in the 30(35?) years in your SS history

[TheOtherMe]

My uncle worked full time for many years past 70 and his SS kept increasing based on those earnings.  He too made more money annually after age 70 than he had in his younger working life.

[ripvanwinkle]

I have a odd question. A guy at work said he bought some stock with his credit card. I didn't know you could do that. If I bought some stocks with a cc and put it in my Roth IRA does that go against my yearly monetary contribution limit?

[minnesotapaintlady]

Sept 25, 2024 21:33:01 GMT -5 ripvanwinkle said:

I have a odd question. A guy at work said he bought some stock with his credit card. I didn't know you could do that. If I bought some stocks with a cc and put it in my Roth IRA does that go against my yearly monetary contribution limit?

What brokerage firm allows that?  None of the major players do.  Sounds like a horrible idea anyhow.

But, to answer your second question, you can't transfer stocks into your Roth IRA, all contributions have to be cash and all contributions count toward your annual limit.

[Tiny]

Sept 25, 2024 21:33:01 GMT -5 ripvanwinkle said:

I have a odd question. A guy at work said he bought some stock with his credit card. I didn't know you could do that. If I bought some stocks with a cc and put it in my Roth IRA does that go against my yearly monetary contribution limit?

Your guy at work might mean he used the Robinhood app to buy stock.   You can buy stock with a Debit Card (Visa or Mastercard) card through the app.    
Or maybe he is using an app called something like Acorn  or Stash.   


I'm not familiar with any of the above - but I had an acquaintance who was all about "investing" with little or no money -  who was telling me about all the apps they used - and that I should use.   Those 3 are the ones I remember being talked about.     

[ripvanwinkle]

Sept 25, 2024 21:51:16 GMT -5 minnesotapaintlady said:

Sept 25, 2024 21:33:01 GMT -5 ripvanwinkle said:

I have a odd question. A guy at work said he bought some stock with his credit card. I didn't know you could do that. If I bought some stocks with a cc and put it in my Roth IRA does that go against my yearly monetary contribution limit?

What brokerage firm allows that?  None of the major players do.  Sounds like a horrible idea anyhow.

But, to answer your second question, you can't transfer stocks into your Roth IRA, all contributions have to be cash and all contributions count toward your annual limit.

Rats they thought of everything

[minnesotapaintlady]

Sept 25, 2024 22:53:09 GMT -5 Tiny said:

Sept 25, 2024 21:33:01 GMT -5 ripvanwinkle said:

I have a odd question. A guy at work said he bought some stock with his credit card. I didn't know you could do that. If I bought some stocks with a cc and put it in my Roth IRA does that go against my yearly monetary contribution limit?

Your guy at work might mean he used the Robinhood app to buy stock.   You can buy stock with a Debit Card (Visa or Mastercard) card through the app.    
Or maybe he is using an app called something like Acorn  or Stash.   


I'm not familiar with any of the above - but I had an acquaintance who was all about "investing" with little or no money -  who was telling me about all the apps they used - and that I should use.   Those 3 are the ones I remember being talked about.     

I researched a little because I couldn't believe people actually did this and I can't find any apps that allow it.  The closest I can find is buying a giftcard to Stockpile which you can then use to fund your account.  Robinhood, Acorn and Stash do not allow purchases with a card, you have to fund your settlement account from a bank account (can be done via debit card) and make purchases from there. 

I guess you could take a cash advance on your CC and buy stocks that way, but that sounds insanely risky.

[pulmonarymd]

Sept 26, 2024 0:00:01 GMT -5 ripvanwinkle said:

Sept 25, 2024 21:51:16 GMT -5 minnesotapaintlady said:

What brokerage firm allows that?  None of the major players do.  Sounds like a horrible idea anyhow.

But, to answer your second question, you can't transfer stocks into your Roth IRA, all contributions have to be cash and all contributions count toward your annual limit.

Rats they thought of everything

Pay your taxes. You deferred them for all these years, and had tax free appreciation. Taxes provide all kinds of things you benefit from: SS, Medicare, roads, clean water, air, food safety, the FAA, etc. none of that is free. Unless you think you just deserve all that

[Rukh O'Rorke]

Sept 26, 2024 7:29:11 GMT -5 minnesotapaintlady said:

Sept 25, 2024 22:53:09 GMT -5 Tiny said:

Your guy at work might mean he used the Robinhood app to buy stock.   You can buy stock with a Debit Card (Visa or Mastercard) card through the app.    
Or maybe he is using an app called something like Acorn  or Stash.   


I'm not familiar with any of the above - but I had an acquaintance who was all about "investing" with little or no money -  who was telling me about all the apps they used - and that I should use.   Those 3 are the ones I remember being talked about.     

I researched a little because I couldn't believe people actually did this and I can't find any apps that allow it.  The closest I can find is buying a giftcard to Stockpile which you can then use to fund your account.  Robinhood, Acorn and Stash do not allow purchases with a card, you have to fund your settlement account from a bank account (can be done via debit card) and make purchases from there. 

I guess you could take a cash advance on your CC and buy stocks that way, but that sounds insanely risky.

No! Do it! Do it!

Then buy more stocks on the margin produced from the cc advance.


What could go wrong?? 

[ripvanwinkle]

YAY... I don't have to sell my stocks. I just found a workaround on my RMD. Its called a "In Kind Distribution". I can keep and move my good stocks and yes I do have to pay taxes but just capital gains not income tax. I think I read that right.

www.schwab.com/learn/story/taking-kind-distributions-from-your-ira?msockid=0268dbadd8be61690eafcb1ed91660fb

[jerseygirl]

Nope that article says to pay TAXES on the in kind transfer, from an IRA. It refers to RMD taxes nothing about capital gains taxes

But yes you can move the stocks. don’t need to sell first then transfer the cash

[minnesotapaintlady]

Oct 21, 2024 21:51:46 GMT -5 ripvanwinkle said:

YAY... I don't have to sell my stocks. I just found a workaround on my RMD. Its called a "In Kind Distribution". I can keep and move my good stocks and yes I do have to pay taxes but just capital gains not income tax. I think I read that right.

www.schwab.com/learn/story/taking-kind-distributions-from-your-ira?msockid=0268dbadd8be61690eafcb1ed91660fb

Yeah, you totally read that wrong.  The article basically says exactly what I put in post #14 a couple pages back. You are taxed on the entire value of the stocks transferred.

You pay taxes on the value of the assets you transfer: Some retirees prefer to use in-kind transfers during a stock market downturn because they're taxed on the current value of the assets they transfer. If you paid $20,000 for a stock a few years ago but the value of those shares is now $15,000, you'll pay taxes on the current, lower value of the distribution.An in-kind IRA distribution resets the basis: When you use an in-kind RMD, your basis resets. The IRS sees the value at the time of the transfer as your new basis.

[ripvanwinkle]

Oct 21, 2024 22:44:32 GMT -5 minnesotapaintlady said:

Oct 21, 2024 21:51:46 GMT -5 ripvanwinkle said:

YAY... I don't have to sell my stocks. I just found a workaround on my RMD. Its called a "In Kind Distribution". I can keep and move my good stocks and yes I do have to pay taxes but just capital gains not income tax. I think I read that right.

www.schwab.com/learn/story/taking-kind-distributions-from-your-ira?msockid=0268dbadd8be61690eafcb1ed91660fb

Yeah, you totally read that wrong.  The article basically says exactly what I put in post #14 a couple pages back. You are taxed on the entire value of the stocks transferred.

You pay taxes on the value of the assets you transfer: Some retirees prefer to use in-kind transfers during a stock market downturn because they're taxed on the current value of the assets they transfer. If you paid $20,000 for a stock a few years ago but the value of those shares is now $15,000, you'll pay taxes on the current, lower value of the distribution.An in-kind IRA distribution resets the basis: When you use an in-kind RMD, your basis resets. The IRS sees the value at the time of the transfer as your new basis.

So if my $20,000 stocks went up 25% I pay taxes on the increase on the cost basis at the long term capital gains rate?

[tallguy]

Oct 22, 2024 0:43:45 GMT -5 ripvanwinkle said:

Oct 21, 2024 22:44:32 GMT -5 minnesotapaintlady said:

Yeah, you totally read that wrong.  The article basically says exactly what I put in post #14 a couple pages back. You are taxed on the entire value of the stocks transferred.

So if my $20,000 stocks went up 25% I pay taxes on the increase on the cost basis at the long term capital gains rate?

Let me try and guess what you are actually asking.

You contributed money to an IRA, or did a rollover from a 401k, at some point in the past.  All of those contributions were made with pre-tax money.  You bought a stock within your IRA for $20,000.  It is now worth $25,000.  You want to satisfy your RMD requirement by doing an In Kind Distribution of that $25,000 stock to a taxable investment account.  Correct?

In that case, all $25,000 of the distribution are taxable as ordinary income in the year that you do the distribution.  Because none of the money was taxed originally it will all be taxed on distribution.  From the investor's standpoint, there are effectively no capital gains within an IRA.  There are earnings, and those earnings are taxed as ordinary income.  When you transfer the stock to the taxable account, your cost basis gets reset to $25,000, or whatever the market value is at the time of the transfer.  Any growth after that in the investment account will be taxed at capital gains rates. 

You keep trying to scam the tax code.  It doesn't work.  The only real way to avoid tax is to have such a low taxable income that you pay little or no tax.  Most people with investments can't do that, nor would they want to.  Personally, I would love to pay a million dollars in tax every year.  That would mean I am keeping about double that.  As it is, I pay zero income tax and won't for another decade or so because I don't need to.  I do that by controlling my income.  When RMDs hit I will likely not be able to do that any more.  So be it, and I'll deal with it then.

[minnesotapaintlady]

Oct 22, 2024 0:43:45 GMT -5 ripvanwinkle said:

Oct 21, 2024 22:44:32 GMT -5 minnesotapaintlady said:

Yeah, you totally read that wrong.  The article basically says exactly what I put in post #14 a couple pages back. You are taxed on the entire value of the stocks transferred.

So if my $20,000 stocks went up 25% I pay taxes on the increase on the cost basis at the long term capital gains rate?

If you do an in-kind transfer of 20K of stocks you pay taxes on 20K of income. If after you transfer the 20K of stocks to taxable the value increasing to 25K and you sell you pay capital gains on the 5K.

[minnesotapaintlady]

You do realize if what you think was possible RMDs would not be an issue for anyone and nobody would pay taxes on them right? This "loophole" would be as commonly discussed as backdoor Roth. But, the rules are quite clear that any amount put in pre-tax is taxable at your marginal rate upon withdrawal whether the withdrawal is in cash or in-kind.

Otherwise, everyone would just convert their mutual funds to ETFs or stocks right before taking their distribution and not pay ANY tax (there wouldn't be any capital gains in this instance either).

[soupandstew]

Oct 22, 2024 6:20:50 GMT -5 minnesotapaintlady said:

Oct 22, 2024 0:43:45 GMT -5 ripvanwinkle said:

So if my $20,000 stocks went up 25% I pay taxes on the increase on the cost basis at the long term capital gains rate?

If you do an in-kind transfer of 20K of stocks you pay taxes on 20K of income. If after you transfer the 20K of stocks to taxable the value increasing to 25K and you sell you pay capital gains on the 5K.

And this is exactly how I handle my IRA's RMD.  My IRA holds 3 equities.  I bought 1 stock 15 years ago and it's appreciated substantially.  I still think it has room to grow and don't want to sell it, so I just transfer the shares to my taxable account, therefore bumping up my basis and reducing future capital gains when I sell the position someday.  I pay ordinary income tax now on the full value of the transfer.  

[TheOtherMe]

Oct 22, 2024 3:19:03 GMT -5 tallguy said:

Oct 22, 2024 0:43:45 GMT -5 ripvanwinkle said:

So if my $20,000 stocks went up 25% I pay taxes on the increase on the cost basis at the long term capital gains rate?

Let me try and guess what you are actually asking.

You contributed money to an IRA, or did a rollover from a 401k, at some point in the past.  All of those contributions were made with pre-tax money.  You bought a stock within your IRA for $20,000.  It is now worth $25,000.  You want to satisfy your RMD requirement by doing an In Kind Distribution of that $25,000 stock to a taxable investment account.  Correct?

In that case, all $25,000 of the distribution are taxable as ordinary income in the year that you do the distribution.  Because none of the money was taxed originally it will all be taxed on distribution.  From the investor's standpoint, there are effectively no capital gains within an IRA.  There are earnings, and those earnings are taxed as ordinary income.  When you transfer the stock to the taxable account, your cost basis gets reset to $25,000, or whatever the market value is at the time of the transfer.  Any growth after that in the investment account will be taxed at capital gains rates. 

You keep trying to scam the tax code.  It doesn't work.  The only real way to avoid tax is to have such a low taxable income that you pay little or no tax.  Most people with investments can't do that, nor would they want to.  Personally, I would love to pay a million dollars in tax every year.  That would mean I am keeping about double that.  As it is, I pay zero income tax and won't for another decade or so because I don't need to.  I do that by controlling my income.  When RMDs hit I will likely not be able to do that any more.  So be it, and I'll deal with it then.

  Pay the taxes and stop trying to commit fraud.

[minnesotapaintlady]

I don't even know how you would could cheat on your taxes and get this to work?  None of the tax software is going to calculate capital gains instead of ordinary income tax on a pre-tax distribution, and if you filled out all the forms manually instead to get around that you still have to report all 1099-R box 1 amounts on line 4b of your 1040 which is then added to ordinary income.  I mean, you can TRY to just put a different amount down, but that's bound to throw up red flags if those numbers don't match.

[TheOtherMe]

The flags won't get noticed right away.  When they do get noticed and Rip gets a notice saying how much he owes in taxes, interest and penalty, he will be here crying.  

No sympathy from me.  Rip spends way too much time figuring out how not to pay taxes.  Do you drive on the roads?  Do you use utilties in your home?  

We, the people, pay taxes for things we all use

There are definitely things I don't like my taxes being used for but I will not cheat to reduce my taxes.  My goal is to pay the lowest amount of taxes I legally owe, but Rip wants to cheat.  

MPL is correct that the tax software would have to be manipulated and couldn't be electronically filed if you prepare your own taxes.  So you file a return that couldn't be e-filed.  That filing will not be the end of your filing season.

[minnesotapaintlady]

And if you're going to do that, may as well leave some of the W2 income off as well.

[tallguy]

Oct 22, 2024 14:06:29 GMT -5 TheOtherMe said:

The flags won't get noticed right away.  When they do get noticed and Rip gets a notice saying how much he owes in taxes, interest and penalty, he will be here crying.  

No sympathy from me.  Rip spends way too much time figuring out how not to pay taxes.  Do you drive on the roads?  Do you use utilties in your home?  

We, the people, pay taxes for things we all use

There are definitely things I don't like my taxes being used for but I will not cheat to reduce my taxes.  My goal is to pay the lowest amount of taxes I legally owe, but Rip wants to cheat.  

MPL is correct that the tax software would have to be manipulated and couldn't be electronically filed if you prepare your own taxes.  So you file a return that couldn't be e-filed.  That filing will not be the end of your filing season.

Rip spends way too much time TRYING to figure out how not to pay taxes.  He fails, miserably, every time.  On the bright side, it is at least somewhat comforting to know that politics and current events are not the only things he is never right about.  You can add this to the list too. 

[TheOtherMe]

Oct 22, 2024 14:10:07 GMT -5 minnesotapaintlady said:

And if you're going to do that, may as well leave some of the W2 income off as well.

Another red flag!