A Romney Problem

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
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TravelforFun
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A Romney Problem

Post by TravelforFun »

What other Bogleheads have done to soften the tax hit if you had most of your money in 401K and IRA accounts and had to take RMD? I will have to deal with RMD in a few years. I read somewhere that Mitt Romney has a similar problem.
Levett
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Re: A Romney Problem

Post by Levett »

Me. I paid my taxes.

Lev
livesoft
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Re: A Romney Problem

Post by livesoft »

Increase charitable contributions.
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Ged
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Re: A Romney Problem

Post by Ged »

I am delaying my SS and converting a good part of my TIRA to ROTH.
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cheese_breath
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Re: A Romney Problem

Post by cheese_breath »

I started doing Roth conversions from the day they came out. I'm taking RMDs now and am in the 15% bracket because I moved enough into Roths before I hit 70. As far as I know Mitt doesn't have any magic in his toolkit and will have to start taking RMDs too when he hits the required age.
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livesoft
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Re: A Romney Problem

Post by livesoft »

Ged wrote:I am delaying my SS and converting a good part of my TIRA to ROTH.
That's before RMDs. If one has to take RMDs, I hope they are not delaying SS anymore.
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DonCamillo
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Re: A Romney Problem

Post by DonCamillo »

I have been doing annual Roth conversions for several years, and plan to continue even after age 70 1/2.

Understand that the effect of the Required Minimum Distribution and Federal taxes may not be that much of a burden.. If you have $1,000,000 in your account, are 70 1/2 years old and in the 39.6% tax bracket, you will have to withdraw $36,000 and pay $14,256 in taxes. That is 1.43% of your original balance, probably not very significant overall considering that you did not pay tax on the money when you put it in the account.

Much to my chagrin, I probably do not have to worry about the top tax bracket. :(
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Toons
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Re: A Romney Problem

Post by Toons »

Mitts dilemma,,,,,100 Million,, :happy

http://taxprof.typepad.com/taxprof_blog ... pros-.html

Start drawing out your money now,keep an eye on your tax bracket
Crunch the Numbers :happy
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DonCamillo
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Re: A Romney Problem

Post by DonCamillo »

It is Romney's heirs that are going to get clobbered.

I was the executor of a $3 million estate. Most of the taxes paid by the heirs were on the $37,000 IRA that was included in the estate. Everything else was covered by the step up in value, it was in a state without a death tax, and it was below the federal estate tax limit.
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joe8d
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Re: A Romney Problem

Post by joe8d »

Levett wrote:Me. I paid my taxes.

Lev
Same here.
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Index Fan
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Re: A Romney Problem

Post by Index Fan »

I hear you can start your own foundation and do pretty well that way.
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bhsince87
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Re: A Romney Problem

Post by bhsince87 »

Congratulations! :sharebeer
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dodecahedron
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Re: A Romney Problem

Post by dodecahedron »

Easy solution for Mitt (and anyone in his situation): roll all traditional IRAs, traditional 401ks, traditional 403bs, etc. into a 401k or 403b at an employer where you plan to work part-time, at least in some limited capacity, indefinitely. (In Mitt's case, I am sure there are plenty of consulting firms that would be thrilled to list him on their letterhead as an employee and get a few hours a year of access to his advice and the connections in his rolodex.) There are no RMDs from a traditional employer plan where you are still an active employee, if only part-time.

This can buy you more years to Rothify your traditional funds, at whatever rate seems optimal, which will mitigate the burden on your heirs, who will have to start taking RMDs.
Last edited by dodecahedron on Fri Jul 18, 2014 8:33 pm, edited 1 time in total.
Stonebr
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Re: A Romney Problem

Post by Stonebr »

joe8d wrote:
Levett wrote:Me. I paid my taxes.

Lev
Same here.
+1. I've received great benefits from living in this great country. I don't have any qualms about paying something back.
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TravelforFun
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Re: A Romney Problem

Post by TravelforFun »

DonCamillo wrote:It is Romney's heirs that are going to get clobbered.
True! If he passed, his wife would be okay but when she passed, their kids would get clobbered!
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Ged
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Re: A Romney Problem

Post by Ged »

livesoft wrote:
Ged wrote:I am delaying my SS and converting a good part of my TIRA to ROTH.
That's before RMDs. If one has to take RMDs, I hope they are not delaying SS anymore.
Yes. But the OP did say he isn't taking RMDs yet.
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Re: A Romney Problem

Post by LadyGeek »

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