Love listening to Ed Slott. Great video and content. One topic that wasn't covered is the impact of higher Medicare irmaa premiums when doing Roth conversions in the higher brackets. Would like to see more of these Q&A sessions with Ed!
Good video. I'm doing Roth Conversions for my child. Currently, since I'm still working, we are able to pay the taxes mostly with our income. Will do this as long as we can.
The question is whether Congress can resist screwing over Roth account holders. Balance limits with forced withdrawals and/or tax on “excessive” balances is being floated in the media. They could indirectly tax Roths by adding their distributions to income for SS taxation and IRMAA.
My Vanguard financial wealth management agent says only do this if you can pay the taxes out of your income. If you have to use your investment income to pay the taxes, that would mean that you are losing (in my case) about a 7% annual return on that money. In my case, a $40,000 conversion costs me about $4,800 in extra income taxes. I can't pay this out of my income, so I have to take it out of my Vanguard account. I'm in the 12% tax bracket. The future value of $4,800 at a 7% annual return over 20 years is approximately $18,574.49. That's how much I'm losing. Is it still worth it?
No mention of the 2 year look back for Medicare on one’s income. Any conversion, no matter how favorable it is individually, counts as income. If you go over the IRMAA income limits it costs more for monthly Medicare premiums for everyone in the household.
For higher income earners (right now, still working), you really think our tax bracket will be higher when we’re retired and only earning passive income? Intuitively, that makes zero sense to me.
Small taxes can affect investment decisions such as whether to choose tax-free municipal bonds over taxable bonds or do a Roth IRA conversion. I’ve been sitting on over $745K equity from a home sale and I want to invest on the stock market, how do I achieve this without being taxed twice?
I have two pensions. I would much rather have had a Roth 401k throughout my working lifetime. $500/month invested from 25 - 65 at 9% is $2.3mil. I hate my job but can't leave because of I won't get my state pension. What do you think about doing a 70/30 stocks bond ratio?
I like to have SCHD. 20% of each ROTH IRA Portfolio. Yield: 3.75% 60% SPY. 20% Various Income Funds, PFF, ILTB, TLT.....What are more interesting buys for long term growth? I want to get in with about 300k in cash savings lying waste to inflation
If one converts 100% of their IRA to a Roth now, they pay 100% of the taxes immediately, at the dollars highest value, and lose the potential gains that would have come from the taxes-not-paid?
As of the date I'm writing this, neither Biden nor Trump want to raise taxes for the average taxpayer. So I'm not willing to bet that tax rates for me and other average Joes will be higher after 2025. But we won't know until the end of 2025 because Congress won't do anything before then.
How and when does one pay the state income tax. I am assuming the payment to the IRS is just federal income tax. Or do both payments get made to the IRS.
The key to making sure this works for you is to pay the tax upon conversion from external funds and convert ALL the traditional IRA investment account to the Roth. 5:52
Small taxes can affect investment decisions such as whether to choose tax-free municipal bonds over taxable bonds or do a Roth IRA conversion. I’ve been sitting on over $745K equity from a home sale and I want to invest on the stock market, how do I achieve this without being taxed twice?
