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Silk McCue wrote: ↑Mon Mar 20, 2023 1:05 am

Navillus1968 wrote: ↑Sun Mar 19, 2023 11:04 pm

OP's friend is forgoing $1350/month for 15 months= $20,250.

At 70, her benefit will be $1350 x 1.1= $1485/month.

Breakeven number of months after 70: $20,250/1485= 13.6 months.

The break even analysis you performed is fatally flawed.

Your numbers only show how long it takes to earn what they would have earned up until age 70. It then ignores that they would have continued to earn that in the 13.6 months that you claim achieves break even.

The real break even is 12.5 years (150 months) . $20,250 / ($1485- $1350) = 150 months.

Cheers

Oops- that's why posting after midnight is a bad idea! Appreciate the correction. It did seem too good to be true.

123 wrote: ↑Sun Mar 19, 2023 10:38 pm

Navillus1968 wrote: ↑Sun Mar 19, 2023 9:49 pm ...A 10% raise that lasts forever sounds pretty good...

It would depend on how long her "forever" turns out to be.

OP's friend is forgoing $1350/month for 15 months= $20,250.

At 70, her benefit will be $1350 x 1.1= $1485/month.

Breakeven number of months after 70: $20,250/1485= 13.6 months. Note- this doesn't factor in the taxes owed on the 15 months of SS while she is working full-time, which reduces the numerator.
People get hit by buses, but OP's friend has a decent chance of making it to 71 if she's fit enough to work 40 hours a week at age 68 and counting.

I read the Wiki and a few other resources and wanted to check my understanding of the rules to inheriting and IRA to make sure it is correct. If I am a non-spouse beneficiary and do not qualify as an "eligible designated beneficiary", and the original owner has started taking RMD's, then I must take RMD over a 10 year period. Furthermore, if the original owner already made a RMD for 2023, then I must start my RMD in 2024. I am not interested in taking a lump-sum. Sound correct? You mention the IRA owner taking a 2023 RMD, so it's clear you inherited a Traditional IRA, yes? You are correct that the IRA owner having started RMDs means you must continue RMDs. As you note, you must also liquidate the inherited IRA by 31 DEC of the 10...

Have your friend plug her numbers into https://opensocialsecurity.com/

If suspending benefits makes sense, the calculator will recommend it. I would bet money that suspending her SS is the way to go- build DRC & avoid taxes on her SS benefit, it's a win-win.

A 10% raise that lasts forever sounds pretty good.

SSA will restart her benefits automatically at 70, but she also has the option to restart them by contacting SSA at any time prior to 70. https://www.ssa.gov/benefits/retirement ... spend.html

PS- Your friend will have to pay her Medicare bill separately, since withholding it from a suspended SS benefit is not a thing.

Your golfing buddies are correct if they were referring to SS spousal benefits, not survivor (widow/er) benefits". Spousal benefits based on a spouse's yet to be claimed benefits are zero because spouse's benefits have not started. That only leaves the survivor benefit. OP here. What is the value of a "spousal benefit" versus a "survivor benefit"? Your wife has the possibility of up to three SS benefits, depending on her work history. 1. Her own SS retirement benefit. For this to be available, your wife has to accumulate 40 quarters of employment & be at least 62. 2. A spousal benefit that is based on your SS retirement benefit. For this to be available, the worker (you) has to have begun taking his retirement ...

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some additional info based on above comments my wife's early SS at age 64 in Jan 2024 will be ~$24k/yr my SS at age 70 in Jun 2026 will be ~$55k/yr (current calculations but assume it will be higher due to COLA) $150k in Roth conversions will put you in the middle of the 22% marginal tax rate, adding $24k of SS benefit ($20.4k taxable income) won't change that. taxable accounts total ~$1.5m AA 65/35 - can fund living expenses and Roth taxes from taxable until SS or RMD's hit T-IRA ~$3m AA 55/45 R-IRA - $160k AA 100% equities current spending $140k to $175k annually (includes $40k or more for non-essentials like gifts, charities, grandkids 529, multiple vacations, etc.) - from taxable we will sell mutuals or stocks and pay capital gains if/...

Can I give the contents of my Fidelity brokerage account to someone else who also has a Fidelity account? My account is composed of ETF's and they will not be sold by either myself nor the person who will receive them. Is this going to be a taxable event for either one of us? Thank you very much for any help. Neither the donor (you) nor the donee (recipient of the gift) will pay taxes on your gift when the gift is made. However, the EFTs you gift carry with them your cost basis, so that if the donee ever were to sell the shares, their capital gains would be calculated on the price you paid & taxes would be due at that point. There are some exceptions (donations to charity, death of the donee), but that's the gist. If your gift exceeds ...

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Allan wrote: ↑Tue Mar 14, 2023 6:20 pm I posted this question on another thread and decided to re-ask the question here. I am re-marrying in a few months, both of us are over 70. I didn't start my Soc Sec until 70, therefore my benefit is higher than my soon-to-be spouse. If I should pass away would my wife be able to take my higher benefits?

The marriage has to last nine months for the new wife to qualify for survivor benefits. AARP- "In most cases, a widow or widower qualifies for survivor benefits if he or she is at least 60 and had been married to the deceased for at least nine months at the time of death." https://www.aarp.org/retirement/social- ... -dies.html

I'd put off the sky-diving lessons for a while...

This thread sounds like you are on the young side and trying to max out tax-deferred options. I think you should max out your Roth options while you are young. As time goes on and your joint income grows more than the tax brackets grow and your tax burden grows, then you can change to more tax-deferred in your later working years. If you read some of the threads by older Bogleheads about doing Roth conversions before their RMDs start, you will soon realize there is such a thing as “too much” in tax deferred. Even if you die with a lot left in tax-deferred, your heirs will be stuck with emptying it out over 10 years (assuming they will have have to roll the plan into a Rollover [traditional] IRA). We are in early to mid 30s with a late star...

Hey, thanks for another clue! If I assume the net permitted contribution of c. $12k included all of my catch-up $, that should give me an idea of what the (then-) permitted max was... Maybe. ADP has always allowed anything in the range [1,90]% of paycheck. Haha, great. I would inform ADP ASAP that you have likely already over-contributed for 2023. They will figure it out soon enough, but better to get the ball rolling. The sooner they cut you a check, you'll avoid shifting income to 2024. If $12k was the limit for 2022, I wouldn't expect a big difference this year. PS- I wasn't kidding about telling your co-workers to get on the 401k train, especially the two guys who put in zero! In a company with only 12 workers, two zeroes looms large i...

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In either case, is a 457 available with strictly employee contributions? Putting a lot in there would likely reduce AGI. This isn’t clear to me and I would agree could be a game changer. We will look into this more. I think it’s not an option. But let’s say it is. And let’s say we have $20,000-$30,000 a year that we can funnel into any retirement account. Is there a reason to use her 457 vs a traditional Roth? I assume we should max out the HSA first, as I do understand that one’s advantage. I guess what I’m saying is, does it even matter if it’s an option if we decide to try to direct our savings towards another pre tax vehicle that would also reduce our AGI? You haven't mentioned whether your salary of $160k includes an employer plan and...

Thank you all for the discussion. It seems that @celia and others posit the idea that both my planner and my accountant could be right, for different reasons. i.e.,  do you want lower taxes now, or in retirement? I'd actually like to do both:-). But in all candor, after reading the discussion and advice above, I am inclined to do both ... take advantage of the tax deferral of the SEP-IRA now, as well as contribute to the Roth up to the top of our current tax bracket, this year and in future years.  As @peterfoley said, having money in taxable, tax deferred and Roth gives you broader options (better control of tax rates and IRMAA) when it comes to withdrawals and RMDs. But -- more information was requested -- thank you in advance for recons...

In either case, is a 457 available with strictly employee contributions? Putting a lot in there would likely reduce AGI. This isn’t clear to me and I would agree could be a game changer. We will look into this more. I think it’s not an option. But let’s say it is. And let’s say we have $20,000-$30,000 a year that we can funnel into any retirement account. Is there a reason to use her 457 vs a traditional Roth? I assume we should max out the HSA first, as I do understand that one’s advantage. I guess what I’m saying is, does it even matter if it’s an option if we decide to try to direct our savings towards another pre tax vehicle that would also reduce our AGI? You haven't mentioned whether your salary of $160k includes an employer plan and...

Is there any advantage/need for my wife to have a her own Roth IRA established before I pass? I can't see any! I have a TIRA and old Roth late 1990s IRA. She has a TIRA. We jointly own a taxable investment account with VTSAX. She is primary beneficiary on my TIRA and Roth IRA. I believe she can just inherit my Roth and have it retitled in her name. We are very close in age (mid 80s) so I don't see any age impact worth really considering. Any comments? It's true that your wife can assume your Roth IRA & treat it like her own RIRA, which prevents RMDs during her lifetime. The advantage to opening a Roth IRA in her name is that it would allow Roth conversion of money from her TIRA to avoid future RMDs. This may become significant if one o...

If she moved the money properly (within a 60 day window) from the decedent's 401(k) into an inherited IRA, then you're correct. The rollover would not be taxable and she would only be taxed when she takes distributions. The Empower 1099-R is probably because they don't know what she did with the money. There should be a way in your tax software to indicate that the full amount was rolled over. This should then have the effect or reducing to zero the amount of the distribution that is taxable. If she missed the 60 day window, then there may be circumstances where the IRS would grant a waiver (and treat it as a qualified rollover). See IRS Revenue Procedure 2020-46 for more details. And yes, generally she has 10 years to empty the IRA. I don...

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Spin off question, if MFJ is set at 228, and we continue to do an earner and a spousal (non earner not retired) roth backdoor, is there any downside to just keeping the backdoor method if income is on the cusp? I won't be able to know what the income will be until bonus are quantified. Normally I would do these in early in the year but this year I am in no rush. The great benefit to the backdoor Roth process is that it works every year, the front door option can easily be closed off by bonuses or unexpected cap gains, etc. appearing late in the year. The backdoor process is a slight PITA, but re-characterization is a much bigger PITA, especially if earnings are involved. If there's any doubt about MAGI level for the tax year, just do the B...

Call_Me_Op wrote: ↑Mon Mar 13, 2023 11:41 am To my surprise, it turns out I saved all of my form 8606's going back to early 2000's and thus I have all of the non-deductible contributions documented. I did make an error in the cumulative contribution early on and corrected it a few years ago.

I love it when a plan comes together! That's great news. Now you can move ahead with your Roth conversion plans, confident that all your ducks are in a row.

My W2 this year is 420K, AGI ~460K, and hence I have been using backdoor Roth IRA to get around income limits. My soon-to-be-wife had W2 and AGI around 60K this year, below AGI limits for Roth IRA, and she is investing in Roth IRA the first time this year. (No backdoor needed). We are getting married this year. We will be maxing out our Roth IRAs, and we will be filing taxes jointly (MFJ). In this case, will she need to use backdoor Roth IRA due to combined AGI limits? What is the MFJ income limit for Roth IRA? And does backdoor method work for both partners in MFJ filing as well? I don't want to assume anything, but does the bolded line above imply soon-to-be DW has previously contributed tax-deductible money to a Traditional IRA? With $6...

I am currently in a 22% marginal tax bracket and am 62. I used to do back-door Roths, but I recently rolled my pension into a traditional IRA, so that option is now off the table. An advisor (who wants my business) told me I should still contribute to the non-deductible IRA anyway for the tax deferral advantage. I'm struggling to see the advantage in this approach unless I could stay in the 12% bracket once I retire. I'm considering doing Roth conversions once I retire and eventually I'll have to take RMD's. I would appreciate the comments and also what else I need to consider. Thanks. You're 62, how many more years of work are you planning? Your SS FRA is 67, if you retire that year, that's 5 years of IRA contributions x $7.5k, or $37.5k ...

Hi retiredjg, I have been a high earner the whole time (single, no spouse). I am getting close to the end of my career. I am 100% certain that all contributions to the Traditional IRA were not deducted. I am not sure how hard it will be to prove that. If nothing else, Social Security has my salary history documented, which would show ineligibility for tax-deductible contributions. If you have your prior years' Form 1040 going back long enough, it would be simple to reconstruct your post-tax basis & defend yourself against any audit. Ask your CPA, if you have one or you can request the 1040s from the IRS for free. https://www.irs.gov/newsroom/heres-how-people-can-request-a-copy-of-their-previous-tax-return Once you have the history of n...

Hi retiredjg, I have been a high earner the whole time (single, no spouse). I am getting close to the end of my career. I am 100% certain that all contributions to the Traditional IRA were not deducted. I am not sure how hard it will be to prove that. If nothing else, Social Security has my salary history documented, which would show ineligibility for tax-deductible contributions. If you have your prior years' Form 1040 going back long enough, it would be simple to reconstruct your post-tax basis & defend yourself against any audit. Ask your CPA, if you have one or you can request the 1040s from the IRS for free. https://www.irs.gov/newsroom/heres-how-people-can-request-a-copy-of-their-previous-tax-return Once you have the history of n...

I'm finding myself thinking more about moving into semi-retirement possibly in the next few years. I've run a couple of retirement calculators and was surprised to find that retirement may be possible sooner than I thought. I would like your opinions on how soon I could retire or at least semi-retire? Could I retire in 5 years, when our mortgage is paid off (as noted further below)? "Semi-Retirement", by the way, to me means either 1) mostly handing off my solo law practice to a younger attorney, and probably working part time, or 2) cutting back my work hours and just working less (this option seems less workable for a variety of reasons) or 3) the "second career" option - closing my law practice altogether and doing s...

I'm finding myself thinking more about moving into semi-retirement possibly in the next few years. I've run a couple of retirement calculators and was surprised to find that retirement may be possible sooner than I thought. I would like your opinions on how soon I could retire or at least semi-retire? Could I retire in 5 years, when our mortgage is paid off (as noted further below)? "Semi-Retirement", by the way, to me means either 1) mostly handing off my solo law practice to a younger attorney, and probably working part time, or 2) cutting back my work hours and just working less (this option seems less workable for a variety of reasons) or 3) the "second career" option - closing my law practice altogether and doing s...

Oh boy, this makes things better! You can withdraw from this instead of from Taxable before age 59.5 for living expenses. We are all discouraging withdrawals from tax-deferred to prevent a 10% early withdrawal penalty. But that doesn’t apply to Inherited IRAs as the original owner is now gone and the IRS thus wants the taxes paid. One thing I forgot to mention is that only 85% of your SS will be taxed. Most states (including Calif) won’t tax it at all. That makes perfect sense now, thank you!! I 'll note we married late in life and have mostly separate property. This is because we would like our separate residual estates to ultimately go to our own sets of relatives after we are both deceased. It is not relevant to our spending strategy wh...

With your net worth & unique situation, you need to pay a fee-only tax & estate planning expert for guidance. It will be money well-spent. Agree. I will research advisors but off the top off your head do you know one who would be good for me or how I can find one? Unfortunately, I don't have a name to recommend, but a good place to start is the National Association of Personal Financial Advisors- https://www.napfa.org/find-an-advisor# Another resource is the Garrett Planning Network- https://www.garrettplanningnetwork.com/ Both of these group are fee-based, but exactly how the fees are charged varies by adviser, so you'll need to discuss exactly how you'll be charged when you have an initial meeting. Given your complex situation, p...

We are a married couple. Him:  age 57.  Life expectancy age 70-75. Her:  age 53 normal life expectancy.   Portfolio: Taxable:   $5 million tIRA/401k:  $3.7 million Roth:  $0.6 million Total:  $9.3 million  Current allocation:  VTI 53 %, VXUS 7 %, BND 40% All BND is in tIRA/401k Income going forward probably in the range of $100k annually for 2-4 years.     Annual expenses not including taxes $210k (not much flexibility on this, much of this is medical/insurance related expenses).  We own home outright.  No pensions.  No debt. SS estimate:  him: $3200 if taken at age 67.  Her:  $1500 if taken at age 67 Taxes:  Currently 9.3 % state, 24 % federal tax brackets No children or legacy concerns.  Questions: 1)  Is a reasonable withdrawal strategy...

Me - 78 years old Wife - 75 years old File Jointly Income: SS - $32000 Pension and Disability - $2900 Minimum IRA Dist - $2700 TOTAL INCOME: $37690 Lowest Tax Bracket for both Fed and Michigan Let me know whatever else you may need. <snip>. The RMD is from my wife’s IRS. I do not have an IRA. No plan to own tax-exempt bond funds. Your wife's IRA should be considered part of your portfolio as a couple, since you are going to be taxed together if you file taxes Married Filing Jointly. Her IRA RMDs affect your income as a couple. Working backwards from her age-based life expectancy factor (75= 24.6) & the RMD of $2700, your wife's IRA is about $65k. That's a substantial part of your portfolio. Out of curiosity, how is your wife's IRA inve...

Currently at 78, left with the $180K that we have been able to save since. If your entire savings is $180k I would not invest it all. Put some in a high yield savings or high paying money market as an emergency fund. With interest rates currently high, even this money will be making money for you. How you invest the rest depends partially on your tax bracket. If you are in a lower bracket, I don't understand the recommendation for using tax-exempt bonds. Can you tell us something about your income? Are you married filing jointly? Me - 78 years old Wife - 75 years old File Jointly Income: SS - $32000 Pension and Disability - $2900 Minimum IRA Dist - $2700 TOTAL INCOME: $37690 Lowest Tax Bracket for both Fed and Michigan Let me know whatever...

Currently at 78, left with the $180K that we have been able to save since. If your entire savings is $180k I would not invest it all. Put some in a high yield savings or high paying money market as an emergency fund. With interest rates currently high, even this money will be making money for you. How you invest the rest depends partially on your tax bracket. If you are in a lower bracket, I don't understand the recommendation for using tax-exempt bonds. Can you tell us something about your income? Are you married filing jointly? Me - 78 years old Wife - 75 years old File Jointly Income: SS - $32000 Pension and Disability - $2900 Minimum IRA Dist - $2700 TOTAL INCOME: $37690 Lowest Tax Bracket for both Fed and Michigan Let me know whatever...