Search found 53865 matches

by retiredjg
Mon Mar 18, 2024 7:31 pm
Forum: Personal Finance (Not Investing)
Topic: Roth IRA recharacterization and tax
Replies: 17
Views: 628

Re: Roth IRA recharacterization and tax

Using the backdoor Roth meneuver in the presence of an "IRA on the side" means that Roth conversions are done at higher tax rates than one would ordinarily choose. The whole purpose of the backdoor Roth maneuver is to get money that is going to be taxed anyway into Roth instead of into taxable. Pro-rating with the "IRA on the side" changes that and causes pre-tax dollars in the IRA to be taxed at one's marginal tax rate while working...instead of a lower tax rate later on in life. So using backdoor Roth in the presence of an "IRA on the side" is not only a paperwork hassle for possibly decades, it also results in paying unnecessary tax, leaving one with less money in the long run. People don't voluntarily choos...
by retiredjg
Mon Mar 18, 2024 4:47 pm
Forum: Personal Finance (Not Investing)
Topic: Roth IRA recharacterization and tax
Replies: 17
Views: 628

Re: Roth IRA recharacterization and tax

You should not use the backdoor Roth method if you have money in an IRA. I would have Vanguard return that contribution to you. I don't know how they do that after a re-characterization but assume they will figure it out. Note that the "associated earnings" are taxable on the 2023 taxes that you are working on now. The instructions found here indicate that you should tell TT that you recharacterized $6,500. I have not done this but assume it is correct. See if that works. https://www.bogleheads.org/forum/viewtopic.php?p=7132894#p7132894 There is no problem doing a Roth conversion while having pretax money in your IRA. There are tax implications for sure. But a blanket ‘don’t do that’ is far too harsh imo. Do it if you want but re...
by retiredjg
Mon Mar 18, 2024 2:56 pm
Forum: Personal Finance (Not Investing)
Topic: Mega Thread on Speed of 2023 Tax Refunds
Replies: 43
Views: 5000

Re: Mega Thread on Speed of 2023 Tax Refunds

eFiled and accepted on 2/28. Refund received on 3/13....2 weeks.
by retiredjg
Mon Mar 18, 2024 2:35 pm
Forum: Personal Finance (Not Investing)
Topic: Roth IRA recharacterization and tax
Replies: 17
Views: 628

Re: Roth IRA recharacterization and tax

You should not use the backdoor Roth method if you have money in an IRA. I would have Vanguard return that contribution to you. I don't know how they do that after a re-characterization but assume they will figure it out.

Note that the "associated earnings" are taxable on the 2023 taxes that you are working on now.


The instructions found here indicate that you should tell TT that you recharacterized $6,500. I have not done this but assume it is correct. See if that works.

viewtopic.php?p=7132894#p7132894
by retiredjg
Mon Mar 18, 2024 2:12 pm
Forum: Personal Finance (Not Investing)
Topic: Taxes. When is married filing separately better than married filing jointly?
Replies: 6
Views: 723

Re: Taxes. When is married filing separately better than married filing jointly?

Note that some tax credits and contributions to Roth IRA can be eliminated by filing separately. Don't jump in there without looking.
by retiredjg
Mon Mar 18, 2024 1:51 pm
Forum: Personal Finance (Not Investing)
Topic: Do I need to file amended Form 8606?
Replies: 7
Views: 470

Re: Do I need to file amended Form 8606?

Over the years, we have seen several "creative" ways that tax-preparers document the backdoor Roth procedure. Some end up with the right amounts on the 1040. Many are just plain wrong. Apparently form 8606 is a universal mystery. :happy

The conversion step is actually on the back of the form, lines 16 - 18. You didn't mention those lines at all. We have seen this before. However, the right numbers appear on lines 4a and 4b and that is what matters.

I would not do anything at all about this myself.
by retiredjg
Mon Mar 18, 2024 1:04 pm
Forum: Personal Finance (Not Investing)
Topic: Amended 1099s from many years ago; can I amend return?
Replies: 16
Views: 1702

Re: Amended 1099s from many years ago; can I amend return?

toddthebod wrote: Mon Mar 18, 2024 12:57 pm I took would like to know when the IRS first contacted anyone about the missing income. My understanding is that they only get 3 or 6 years to come after you for a mistake (assuming this income wasn't left off fraudulently.)
Here is a guess. The decedent didn't pay taxes for whatever reason and the IRS eventually put a lien on the decedent's property. Once the taxes are paid, the estate can be distributed to heirs.
by retiredjg
Mon Mar 18, 2024 12:49 pm
Forum: Personal Finance (Not Investing)
Topic: Form 8606 related question
Replies: 6
Views: 446

Re: Form 8606 related question

If I understand the rule correctly, 2019 is done and gone - you cannot ask for a refund for that year. But 2020, 2021, and 2022 can be amended and you can get a refund for those years by providing the pro-rated 8606 forms with a 1040x. However, I think you must file the 2020 1040x by this coming April 15.

With only $13k basis in an IRA of $1.1 million, you'll have to determine if the juice is worth the squeeze. It looks to me like the conversions would be 98% to 99% taxable anyway.
by retiredjg
Mon Mar 18, 2024 12:28 pm
Forum: Personal Finance (Not Investing)
Topic: Amended 1099s from many years ago; can I amend return?
Replies: 16
Views: 1702

Re: Amended 1099s from many years ago; can I amend return?

Curious how it came to light that the 1099's were wrong? Is that why decedent didn't pay the taxes in the first place? Very odd scenario.

An amended return can be very simple. If the returns are otherwise accurate, all you have to show is the change - with apparently is just the amount of withholding and the resulting change in tax.
by retiredjg
Mon Mar 18, 2024 9:45 am
Forum: Personal Finance (Not Investing)
Topic: Use RMD to pay taxes
Replies: 19
Views: 1050

Re: Use RMD to pay taxes

Yes she can do that. Although some brokerages don't withhold taxes for some states - you'll have to check that part.

Withholding can happen anytime during the year. But if they will not withhold for state, she'll need to start estimated taxes for state now.
by retiredjg
Mon Mar 18, 2024 8:44 am
Forum: Personal Finance (Not Investing)
Topic: Did I "get away with" a 2 year IRMAA lookback?
Replies: 8
Views: 1653

Re: Did I "get away with" a 2 year IRMAA lookback?

I was hoping I could argue against the 2 year lookback because the conversions that put me over the IRMAA limit occurred in January - 2 years and 3 months before Medicare started. This is not one of the accepted arguments to appeal your IRMAA premium. IRMAA is based on your MAGI 2 years previously....in this case tax year 2022. It does not matter when during 2022 the income occurred. A Roth conversion is also not one of the accepted reasons for an IRMAA appeal either. Technically when I read the rules (which I hadn't in detail when I did the conversions) it seemed like I would owe the IRMAA penalty for the rest of this year. Assuming you looked at the 2024 IRMAA table, you do owe the extra premium for the entire year. I think you may be us...
by retiredjg
Mon Mar 18, 2024 8:06 am
Forum: Personal Investments
Topic: Employer 401k Investment Options vs. Self Directed
Replies: 3
Views: 279

Re: Employer 401k Investment Options vs. Self Directed

What you currently have is just fine. There would be no benefit to switching to the self directed option. And if you wanted to drop the Russell 2500 index (mid and small caps), you would probably not see any difference in performance.
by retiredjg
Sun Mar 17, 2024 3:33 pm
Forum: Personal Finance (Not Investing)
Topic: Question re: Turbo Tax Not Handling Roth Conversion Correctly
Replies: 4
Views: 557

Re: Question re: Turbo Tax Not Handling Roth Conversion Correctly

Triple-Nickels wrote: Sun Mar 17, 2024 3:01 pm Hello Bogleheads and Hopefully Some TT Experts,

I'm hoping someone can help me "manually adjust" TT to generate the correct tax liability for a Fidelity 1099-R related to a Roth IRA conversion I did in 2023. Below are the pertinent facts/details of the transaction and the 2023 TT 1040 return:

1. In 2022, I made a $7K (I'm over 50 y.o.) after-tax contribution to my Traditional IRA, which the balance was also reflected on my 2022 Form 5498
Did you document this non-deductible contribution on your 2022 taxes using Form 8606? It sounds like you did not.

I'm not sure about some of the rest of your questions, but these is where to start.
by retiredjg
Sun Mar 17, 2024 3:15 pm
Forum: Personal Investments
Topic: Newbie - Front Load End and ER
Replies: 11
Views: 676

Re: Newbie - Front Load End and ER

In my experience, the front end load shows up on the quarterly statement. That was back when everything was done by snail mail, before computers if you can imagine that. I would assume that the front end load should also show up on your account on the website. If it is not there, my guess is that it was waived.

The ER is "baked into the fund". You will not see it subtracted anywhere because it is subtracted each day before the fund shares are assigned their new value.
by retiredjg
Sun Mar 17, 2024 3:08 pm
Forum: Personal Investments
Topic: what to hold for every 6 month mega back door roth
Replies: 4
Views: 396

Re: what to hold for every 6 month mega back door roth

It is a rare plan that lets you invest differently in the after-tax account than the rest of the 401k. Did you already check that?

If you can, I think the current bond choice is fine if you want to reduce the taxes you pay at conversion time.
by retiredjg
Sun Mar 17, 2024 1:28 pm
Forum: Personal Finance (Not Investing)
Topic: Federal efile rejected * H&R Block
Replies: 32
Views: 3925

Re: Federal efile rejected * H&R Block

I'd give it a week or two and try again. Maybe the "wait until" date was wrong.
by retiredjg
Sun Mar 17, 2024 1:08 pm
Forum: Personal Investments
Topic: Roth Conversion for TSP
Replies: 15
Views: 1137

Re: Roth Conversion for TSP

If you are still working for the government, you cannot roll out anything prior to age 59.5. After age 59.5....I'm not sure. The law allows it and I think the TSP allows it, but it has been awhile.

If you are no longer working for the government, you can roll money out whenever you want.

Rolling from TSP to tIRA is not a taxable event.

I'd suggest that you don't actually need the energy ETFs or the REIT. :happy
by retiredjg
Sun Mar 17, 2024 12:59 pm
Forum: Personal Investments
Topic: Undoing non-deductible IRA
Replies: 17
Views: 1066

Re: Undoing non-deductible IRA

Maybe. Maybe not. :happy

People learn things in different ways. I think some people actually do need that kind of instruction!
by retiredjg
Sun Mar 17, 2024 12:38 pm
Forum: Personal Investments
Topic: Roth Conversion for TSP
Replies: 15
Views: 1137

Re: Roth Conversion for TSP

Last I heard, you could not do a Roth conversion inside the TSP. I know there have been changes though.

You can roll some TSP out to traditional IRA and convert from there. Or, if you know exactly how much and when you want to convert, you can probably go directly from TSP to Roth IRA.

Roth IRA does not have RMDs.
by retiredjg
Sun Mar 17, 2024 11:27 am
Forum: Personal Investments
Topic: Retiring Soon-Questions about rollovers
Replies: 7
Views: 1211

Re: Retiring Soon-Questions about rollovers

Trying to do right wrote: Fri Mar 15, 2024 6:02 pm Hi I have a 403 B through CalSTRS Pension 2 Voya. I am retiring soon. Should I open an IRA at Fidelity or Vanguard or keep the money at Voya?
Not what you asked, but if you have used the backdoor method to contribute to Roth IRA in 2024, don't roll it anywhere until 2025. This seems to be a common backdoor Roth mistake this year.
by retiredjg
Sun Mar 17, 2024 11:12 am
Forum: Personal Investments
Topic: Our new portfolio plan - what do you think?
Replies: 6
Views: 1088

Re: Our new portfolio plan - what do you think?

Looks like a good plan to me. :happy
by retiredjg
Sun Mar 17, 2024 10:15 am
Forum: Personal Finance (Not Investing)
Topic: RMDs On A Combined IRA With RMD/Non-RMD Age Gap
Replies: 6
Views: 427

Re: RMDs On A Combined IRA With RMD/Non-RMD Age Gap

You cannot combine your IRAs. They are individual.
by retiredjg
Sun Mar 17, 2024 9:26 am
Forum: Personal Finance (Not Investing)
Topic: Roth Conversions and Turbotax issue
Replies: 8
Views: 899

Re: Roth Conversions and Turbotax issue

Background in 2023 1. I moved some 401K to Rollover IRA (preexisting) in mid-Jul 2. Then converted some funds (more than #1 above) to Roth from Rollover 3. Then make some deductible traditional IRA contributions in 2023 4. I have been doing some backdoor Roth conversions in the past by making non-deductible contributions to IRA and then Rolling over to Roth. I am having issues working with Turbotax on this. It is not considering 100% of the funds converted to Roth as taxable. This is leading to issues with tax calculations and I am not sure, how to work around it. For this to happen, Turbotax must think that you still have some basis in tIRA. This could be correct or it could be incorrect. There is one question in there about non-deductibl...
by retiredjg
Sun Mar 17, 2024 9:06 am
Forum: Investing - Theory, News & General
Topic: Vanguard research: Asset location for equity - October 2023
Replies: 4
Views: 557

Re: Vanguard research: Asset location for equity - October 2023

Vanguard has recently published some research about optimizing the location (taxable or tax-advantaged) for various subclasses of equities. The research was summarized in a webpage published on October 23, 2023: Greater tax efficiency through equity asset location . Here's an excerpt: "Of all our findings, this one is the most interesting," said Daniel Jacobs, the other co-author of both papers. “For U.S. investors, U.S. stocks will have a greater percentage of qualified dividend income (QDI) than ex-U.S. stocks, and QDI is taxed at a lower rate than other income. So you would think it would make sense to keep U.S. stocks in taxable accounts and ex-U.S. stocks in tax-advantaged accounts. "But our calculations show that most ...
by retiredjg
Sun Mar 17, 2024 8:59 am
Forum: Personal Finance (Not Investing)
Topic: Roth Conversions and the 8606 Form
Replies: 3
Views: 597

Re: Roth Conversions and the 8606 Form

New at this so talk to me like I'm 18. My wife and I have done backdoor Roths since the tax year of 2021. We've been working with a CPA since 2022. When I went to provide him with all of our stuff (1099s, W-2s, and so on), I was surprised to see that Schwab (where we hold our Roths) doesn't issue statements on the conversion until May. When doing taxes, the CPA should be using a 1099 for the conversion, not Form 5498 which usually comes out in May. The 1099 comes out early in the year following a Roth conversion. So your question is not making sense to me. I imagine this is normal in the industry and there's a good reason why. Google searches were unhelpful in explaining why this is the case but I'm assuming it's because you can still cont...
by retiredjg
Sun Mar 17, 2024 8:16 am
Forum: Personal Finance (Not Investing)
Topic: Annual limit to the number of IRA to IRA transfers?
Replies: 10
Views: 828

Re: Annual limit to the number of IRA to IRA transfers?

Is there a limit to the number of Ira to Ira transfers that can be completed in one year? Based on my research it seems that as long as the transfer is a direct trustee to trustee transfer there is no limit but if I receive a check from the custodian and forward the check to a new custodian that I would be limited to one transfer over a 365 day period. It seems odd to me that there would be a limit for one type of IRA transfer but not the other as in the end they both accomplish the same thing - money moving from one IRA to another. It could depend on who the check is made out to. The reason for this one time per year limit is that people were "floating" loans to themselves by taking money out of IRA and using it for something an...
by retiredjg
Sun Mar 17, 2024 8:00 am
Forum: Personal Investments
Topic: Consolidating ROTHs'
Replies: 5
Views: 1035

Re: Consolidating ROTHs'

If you are not yet 59.5, what is important here is that you are able to reconstruct how and when money got into your Roth IRA(s). It does not matter how many different Roth IRAs you have. There is a specific withdrawal order specified and that order considers all the Roth IRAs to be one account. Bottom line - it does not matter if you open a new Roth IRA or not...the withdrawal sequence will be the same. If you are not yet 59.5 and if you don't already know how each dollar got into the Roth IRA, you need to reconstruct that now if you need to take money out of Roth IRA. Thanks. Not 59.5 anytime soon. My VG backdoor R-IRA is from 2013. I could get 5498 forms from VG up to 2017. Of course I have 8606 filed every year with zero basis. I never...
by retiredjg
Sun Mar 17, 2024 7:44 am
Forum: Personal Finance (Not Investing)
Topic: Amended 1099s from many years ago; can I amend return?
Replies: 16
Views: 1702

Re: Amended 1099s from many years ago; can I amend return?

I remember something about the 3 year limitation applying to getting a refund from the IRS. In other words, you can't ask for a refund on a return more than 3 years ago.

As this story is unfolding, apparently the decedent didn't pay enough in taxes while alive and an IRS collection agent has been assigned to collect those taxes from the estate.

So the estate is not actually looking for a refund but a correction to the amount of taxes owed by the estate. For that, maybe the 3 year limitation does not apply.

Just speculation on my part. Interesting situation.
by retiredjg
Sat Mar 16, 2024 6:48 pm
Forum: Personal Investments
Topic: Seeking Advice: Early Retirement Funding Options and SEPP Withdrawals
Replies: 12
Views: 1162

Re: Seeking Advice: Early Retirement Funding Options and SEPP Withdrawals

If you have a retirement plan at work, you might be able to use the age 55 penalty exception if you retire in or after the year you reach age 55.
by retiredjg
Sat Mar 16, 2024 6:45 pm
Forum: Personal Investments
Topic: Non-401K contribution question
Replies: 17
Views: 1073

Re: Non-401K contribution question

Josh5000 wrote: Sat Mar 16, 2024 6:12 pm We're in 24% tax bracket so no Traditional IRA for us. Not sure why the employer chose Rollover/Simple IRA instead of 401k.
Simpler. Easier. Cheaper for a small employer.

But why do you keep mentioning "rollover"? To my knowledge, there is no connection between a rollover IRA and a SIMPLE IRA (other than it can be rolled into a rollover IRA at some point).

By the way, no backdoor Roth for her....not with the SIMPLE IRA.
by retiredjg
Sat Mar 16, 2024 5:43 pm
Forum: Personal Finance (Not Investing)
Topic: tax brackets etc assuming TCJA sunset no new laws
Replies: 24
Views: 2398

Re: tax brackets etc assuming TCJA sunset no new laws

toddthebod wrote: Sat Mar 16, 2024 5:31 pm
steadyosmosis wrote: Sat Mar 16, 2024 5:26 pm I convert dollars into Roth any year that I can do so at marginal federal tax cost of 12%, or less.
When TCJA expires, I will convert at 15%, or less.
Unfortunately, half the 12% bracket will turn into the 28% bracket.
I think you mean part of the 22% bracket will turn into 28%.

https://www.putnam.com/individual/conte ... s-act-tcja
by retiredjg
Sat Mar 16, 2024 5:32 pm
Forum: Personal Finance (Not Investing)
Topic: Taxing Roth IRA-I need Help
Replies: 13
Views: 1056

Re: Taxing Roth IRA-I need Help

What toddthebod posted looks like the answer to me. I think the problem will be getting someone and HRB to go against what they seem to think their policy is and force line 4b to be blank.
by retiredjg
Sat Mar 16, 2024 5:25 pm
Forum: Personal Investments
Topic: Non-401K contribution question
Replies: 17
Views: 1073

Re: Charles Schwab Roll-Over contribution question

All what you have just posted sounds reasonable, but I think you should change the thread title to better match what you would like responses for. The current title about Charles Schwab and rollovers will tend to misdirect people looking. Changed. It's two different questions. Now the question is: At my spouse's employer, they picked Simple IRA instead of 401k, which has a much higher contribution limit. Is there a way to contribute the difference? No. Not in the SIMPLE IRA. That limit is established by law. If you file taxes jointly and your income is low enough, she could make a deductible contribution to traditional IRA. Of if the income is too high for that, maybe contribute to Roth IRA. Not all retirement savings has to be in retireme...
by retiredjg
Sat Mar 16, 2024 2:31 pm
Forum: Personal Investments
Topic: Non-401K contribution question
Replies: 17
Views: 1073

Re: Charles Schwab Roll-Over contribution question

I don't understand the first question. Why is it not possible to max it out? Were you expecting a SIMPLE IRA to have the same contribution limit as a 401k? The limit for a SIMPLE IRA is lower.

What does this have to do with a Rollover contribution mentioned in the title?
by retiredjg
Sat Mar 16, 2024 12:21 pm
Forum: Personal Finance (Not Investing)
Topic: Amended 1099s from many years ago; can I amend return?
Replies: 16
Views: 1702

Re: Amended 1099s from many years ago; can I amend return?

I was thinking something along the lines of what MarkNYC said, but there has to be some reason the collection agent said that. Was he just wrong?
by retiredjg
Sat Mar 16, 2024 11:53 am
Forum: Personal Finance (Not Investing)
Topic: Roth IRA recharacterization and tax
Replies: 17
Views: 628

Re: Roth IRA recharacterization and tax

Welcome to the forum. :happy

I think something has been entered wrong as well. You probably entered $7695 when you should have entered 6500 as the contribution amount.

Did you get the box to enter an explanation about the re-characterization?

But....there may be a different problem. You said you re-characterized the contribution to your rollover IRA. That sort of hints that you have money in a rollover IRA. If that is correct, you do not want to convert anything to Roth or use the backdoor Roth method at all. In fact, you may want to withdraw your contribution entirely. (Do not do this yourself....have the custodian do it.)

Tell us more.
by retiredjg
Sat Mar 16, 2024 11:20 am
Forum: Personal Finance (Not Investing)
Topic: Taxing Roth IRA-I need Help
Replies: 13
Views: 1056

Re: Taxing Roth IRA-I need Help

Here is a somewhat older explanation for the codes. The part in blue may apply to your situation if you moved your Roth IRA with the last 5 years. Or the 1099 could just be an error....and it should be code Q. https://support.cch.com/kb/solution.aspx/000075139 Distribution Code T If the distribution code entered is "T", the gross distribution is treated the same as code "J" above, with the same cautions, except the distribution is not carried to Form 5329, but see the following note. Any entry made for taxable amount is ignored. Note A code of "T" means the issuer of the 1099-R knows the recipient is over age 59 1/2 but does not know if the Roth IRA was held at least five years. So if the preparer believes this...
by retiredjg
Sat Mar 16, 2024 11:08 am
Forum: Personal Investments
Topic: Questions on Wash Sale?
Replies: 66
Views: 3486

Re: Questions on Wash Sale?

AnEngineer, you seem to be the only person in this thread who interprets the law the way you do. Are there others who have expressed that thought in the past?

Have you found any opinions from lawyers or the government or any other authority that support your thinking? Or is it just your thinking?

I don't mean that in the snide way it might sound in print. I'm interested in whether you came to this conclusion on your own by your reading of the law, or if there are some authorities out there that you may have learned this thinking from.
by retiredjg
Sat Mar 16, 2024 10:24 am
Forum: Personal Investments
Topic: Undoing non-deductible IRA
Replies: 17
Views: 1066

Re: Undoing non-deductible IRA

No, you are not understanding properly. The only way to separate the basis from the IRA is to pour off the pre-tax dollars into a work plan like a 401k, leaving the basis behind.

If there is no work plan, the only thing to do with her IRA is to pro-rate all withdrawals and conversions until she has no money left in IRA. That pro-rating will include both IRAs, not just the one you are calling the non-deductible IRA.
by retiredjg
Fri Mar 15, 2024 5:46 pm
Forum: Investing - Theory, News & General
Topic: Married Filing Jointly, Over Roth Phase Out, Can't Backdoor
Replies: 15
Views: 1223

Re: Married Filing Jointly, Over Roth Phase Out, Can't Backdoor

toddthebod wrote: Fri Mar 15, 2024 5:38 pm
retiredjg wrote: Fri Mar 15, 2024 5:28 pm Oh it makes my head hurt.... :twisted:
Was that a reply to me?
Yes, I'm sorry to say...it was. :happy
by retiredjg
Fri Mar 15, 2024 5:33 pm
Forum: Investing - Theory, News & General
Topic: Married Filing Jointly, Over Roth Phase Out, Can't Backdoor
Replies: 15
Views: 1223

Re: Married Filing Jointly, Over Roth Phase Out, Can't Backdoor

bmelikia wrote: Fri Mar 15, 2024 5:11 pm
retiredjg wrote: Fri Mar 15, 2024 4:13 pm What else? See if your 401k plan offers the opportunity to use the "mega-backdoor Roth" which involves making after-tax contributions and converting to Roth. More plans are doing that these days.
Does my already having funds in a Vanguard Rollover IRA Brokerage Account from a former employer matter/impact the possibility of doing this?

Or could I do a mega-backdoor Roth option through my 401k if they offer the option regardless?
In spite of the similar sounding names, backdoor Roth and mega-backdoor Roth are completely different things. Your IRA does not interfere with what happens with your 401k. But your plan may not offer the required elements for mega-backdoor Roth. See the Wiki for what is required.
by retiredjg
Fri Mar 15, 2024 5:31 pm
Forum: Investing - Theory, News & General
Topic: Married Filing Jointly, Over Roth Phase Out, Can't Backdoor
Replies: 15
Views: 1223

Re: Married Filing Jointly, Over Roth Phase Out, Can't Backdoor

bmelikia wrote: Fri Mar 15, 2024 5:09 pm
retiredjg wrote: Fri Mar 15, 2024 4:13 pm Your IRA does not affect your spouse though. She could use the backdoor Roth method (assuming she has no traditional IRAs)
Interesting. . .I guess I never thought of that was a possibility. . .so since my wife only has a Roth IRA account, we can do a backdoor Roth IRA into her Roth IRA without issue?
Yes. IRAs are individual as far as the IRS is concerned. She can use the backdoor without being affected by your tIRA. Half is better than nothing?

Attached here...the usual warnings about not getting into this without knowing fully what you are doing. And don't expect your tax-preparer to know either because many do not.
by retiredjg
Fri Mar 15, 2024 4:13 pm
Forum: Investing - Theory, News & General
Topic: Married Filing Jointly, Over Roth Phase Out, Can't Backdoor
Replies: 15
Views: 1223

Re: Married Filing Jointly, Over Roth Phase Out, Can't Backdoor

Do not roll an IRA into a mediocre or poor 401k in order to use backdoor Roth. Roth is not nearly that important. Instead, invest your money in an HSA if available and appropriate for your health insurance needs....or a taxable account which is almost as good as Roth. Or pay off high interest debts. Or some combination of those things. Your IRA does not affect your spouse though. She could use the backdoor Roth method (assuming she has no traditional IRAs) What else? See if your 401k plan offers the opportunity to use the "mega-backdoor Roth" which involves making after-tax contributions and converting to Roth. More plans are doing that these days. If not available, don't worry about it. A successful retirement depends on saving m...
by retiredjg
Fri Mar 15, 2024 3:47 pm
Forum: Personal Investments
Topic: Do I need to do anymore Roth conversions?
Replies: 14
Views: 1503

Re: Do I need to do anymore Roth conversions?

In your situation, Roth conversions to benefit your children as heirs seems inconsistent with your desire to contribute more than your RMD amount to charity. If you plan to continue to make QCDs in excess of your current RMDs, I don't think it would make sense to lower your RMDs even further by a Roth conversion. Yes agreed - you need to have somewhat of a goal for the funds before you try and optimize that goal. Having the two goals of charity and also inheritance for heirs is not a poroblem but they need to be assigned a relative value or maybe a % to figure out an optimized approach. My primary goal was to reduce my TIRA balance to avoid taxes, especially with expiration of the TCJA in 2026. Is your tax-deferred account now low enough t...
by retiredjg
Fri Mar 15, 2024 3:10 pm
Forum: Personal Investments
Topic: 76 year old with new IRA from divorce. When to take RMD?
Replies: 8
Views: 1150

Re: 76 year old with new IRA from divorce. When to take RMD?

jastevenson wrote: Fri Mar 15, 2024 11:15 am The IRA in her name was created in October 2023.
I think ,but am not sure, that she owes an RMD for 2023. Her custodian should have calculated the amount of the RMD based on the end of year IRA balance. Contacting them is the first thing to do.

I suppose it is not impossible that there is some exception because of the divorce, but I would not count on it until proven. My bet is she owes two RMDs this year and I think the first one is due soon.


On further thought....I've changed my mind. She had no balance at the end of 2022....so I agree there is no RMD is due.
by retiredjg
Fri Mar 15, 2024 2:56 pm
Forum: Personal Investments
Topic: For Retirement: 403b/457 or brokerage account?
Replies: 6
Views: 579

Re: For Retirement: 403b/457 or brokerage account?

One of the first things to consider is whether you will have a pension and/or SS....or even both. If there will be two pensions, you will not need nearly as much in a tax-deferred account as people without a pension. So you might want to use some Roth 403b or Roth 457 instead of traditional. Much of this depends on your tax bracket which you have not mentioned yet. The 457 plan has the nice benefit of not having an early withdrawal penalty. That money is available for use whenever you leave the employer. The 403b available after age 59.5. When comparing plans, you have to look at the funds available within the plans, the expense ratio of those funds, and the administrative cost of the plans. You probably have good low cost plans but that ne...
by retiredjg
Fri Mar 15, 2024 2:42 pm
Forum: Personal Investments
Topic: Help to confirm these are brokerage acct choices
Replies: 7
Views: 575

Re: Help to confirm these are brokerage acct choices

Ok, I will keep it to these then. Though the dividends seem awfully high... that should not matter because this would still be the best for tax purposes? Thank you for your help! It depends on just how far you want to go to avoid dividends. The usual suggestions for taxable are a broad US stock fund and a broad foreign stock fund. That is what you have. Some people go to the trouble to split their US funds into Value (which they hold in a tax-advantaged account) and Growth (which they hold in taxable) so that a smaller amount of dividends get churned out in taxable. And I believe that some will use Developed Markets in taxable and hold the emerging markets portion of foreign stocks in a tax-advantaged account. Some even try to reduce or el...
by retiredjg
Fri Mar 15, 2024 2:06 pm
Forum: Personal Investments
Topic: Do I need to do anymore Roth conversions?
Replies: 14
Views: 1503

Re: Do I need to do anymore Roth conversions?

In your situation, Roth conversions to benefit your children as heirs seems inconsistent with your desire to contribute more than your RMD amount to charity. If you plan to continue to make QCDs in excess of your current RMDs, I don't think it would make sense to lower your RMDs even further by a Roth conversion. Yes agreed - you need to have somewhat of a goal for the funds before you try and optimize that goal. Having the two goals of charity and also inheritance for heirs is not a poroblem but they need to be assigned a relative value or maybe a % to figure out an optimized approach. My primary goal was to reduce my TIRA balance to avoid taxes, especially with expiration of the TCJA in 2026. Is your tax-deferred account now low enough t...