Contributing to tax deferred + Taxability of SS

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JBTX
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Contributing to tax deferred + Taxability of SS

Post by JBTX » Thu Aug 17, 2017 2:12 pm

Later Edit: - I'm kind of changing the subject of the topic here to taxability of SS - see later posts in threads

I'm curious on people's thoughts on this. I have always been a great believer in tax deferred accounts both traditional and Roths and traditionally have tried to max out both except last couple of years for various reasons.

Fortunately over 30 years this has paid off. I'm 54, and we (wife 48, and two teenage kids) have close to 2 million in various retirement vehicles. Overall 60/30/10 stocks bonds and cash. Roughly 50/50 tIRA and Roth. Then add in another $150k in non retirement savings, in ibonds and cash. $160k mortgage 15 yr 3.25%. Also roughly $60k in 529 and coverdell.

At some point does the value of investing in tax deferred diminish? Here is the thought process:

As you have accumulated signicant savings, and the market appreciates, you need to rebalance back into bonds. As you grow older your bond allocation should increase. At a certain point pretty much all of your new tax deferred contributions effectively go to bonds. Given long term returns on bonds are basically equal to inflation this isn't terribly attractive.

You really aren't much worse at that point paying down a mortgage or putting it in non retirement fund in ibonds.

On balance it is still probably worthwhile to do the tax deferreds but it seems much more incremental than in early years ?

I'm not necessarily asking what i should do, I already know that. I'm not paying off mortgage now, in fact i just refinanced due to remodel ($9000'couch!!) I'm not working at the moment, daughter needs her first car soon (she is 16 but doesn't have license yet ) and both my and my wife's car have about 100k miles and will probably be replaced in 2 to 3 years and daughter goes to college in two years. I highly value liquidity right now. When I'm not working we bleed a couple of thousand a month ongoing cash flow , much of which is what my wife puts into her 401k.

I'm just asking the question has anybody thought of this and does this make sense or am missing something here.
Last edited by JBTX on Fri Aug 18, 2017 1:57 pm, edited 1 time in total.

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FiveK
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Re: Contributing to tax deferred as you approach retirement

Post by FiveK » Thu Aug 17, 2017 2:33 pm

JBTX wrote:
Thu Aug 17, 2017 2:12 pm
I'm 54, and we (wife 48, and two teenage kids) have close to 2 million in various retirement vehicles. Overall 60/30/10 stocks bonds and cash. Roughly 50/50 tIRA and Roth. Then add in another $150k in non retirement savings, in ibonds and cash.
...
I'm just asking the question has anybody thought of this and does this make sense or am missing something here.
With those amounts and assuming no other income, you would be either barely into the 15% bracket or at the top of the 10%, depending on the exact amount of tIRA withdrawals.

If your actual income now incurs a 25% or higher marginal tax rate, you could save the 10-15% difference between contribution and withdrawal tax rates.

missingdonut
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Re: Contributing to tax deferred as you approach retirement

Post by missingdonut » Thu Aug 17, 2017 4:15 pm

JBTX wrote:
Thu Aug 17, 2017 2:12 pm
On balance it is still probably worthwhile to do the tax deferreds but it seems much more incremental than in early years ?
Well, the first dollar invested or saved is always more important than the millionth dollar invested or saved, so it's true in that sense (standard marginal utility of money theory).

What seems to be happening is this: Because your AA is getting less aggressive over time, you are feeling less incentive to save or invest because it won't earn as much, and thus you're less willing to deal with the reduced liquidity that you get in exchange for tax deferred space. That's conflating the two issues, and you're finding that the effect of a changing AA is a change in what you feel is important in your financial life. If you were 90/10 you might not feel that way.

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Re: Contributing to tax deferred as you approach retirement

Post by bloom2708 » Thu Aug 17, 2017 4:22 pm

You are at the point where a taxable account with $200k or $250k would help with short/near term spending/buffer.

We paid off our mortgage, managed to max my 401k and Roths and stuff some into taxable. Now with kids driving, buying and denting cars, college 1 year away, we will use the "taxable account" to cover near term spending fluctuations.

On the other hand, saving the 25% tax on those dollars now is a nice thing. No easy answer.
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Re: Contributing to tax deferred as you approach retirement

Post by JBTX » Thu Aug 17, 2017 5:18 pm

FiveK wrote:
Thu Aug 17, 2017 2:33 pm
JBTX wrote:
Thu Aug 17, 2017 2:12 pm
I'm 54, and we (wife 48, and two teenage kids) have close to 2 million in various retirement vehicles. Overall 60/30/10 stocks bonds and cash. Roughly 50/50 tIRA and Roth. Then add in another $150k in non retirement savings, in ibonds and cash.
...
I'm just asking the question has anybody thought of this and does this make sense or am missing something here.
With those amounts and assuming no other income, you would be either barely into the 15% bracket or at the top of the 10%, depending on the exact amount of tIRA withdrawals.

If your actual income now incurs a 25% or higher marginal tax rate, you could save the 10-15% difference between contribution and withdrawal tax rates.
How do you get that? Let's say I have 1.2 million, in today's dollars, in the tIRAs. Assume I was old enough to take RMDs now. I found an RMD calculator that says I'd need to pull out about $57k. Does that sound right? That would be in the 15% rate but closer to the top than bottom of the bracket.

I really need to put this all in a spreadsheet and see how it works out. But I get your point.

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Re: Contributing to tax deferred as you approach retirement

Post by JBTX » Thu Aug 17, 2017 6:50 pm

FiveK wrote:
Thu Aug 17, 2017 2:33 pm
JBTX wrote:
Thu Aug 17, 2017 2:12 pm
I'm 54, and we (wife 48, and two teenage kids) have close to 2 million in various retirement vehicles. Overall 60/30/10 stocks bonds and cash. Roughly 50/50 tIRA and Roth. Then add in another $150k in non retirement savings, in ibonds and cash.
...
I'm just asking the question has anybody thought of this and does this make sense or am missing something here.
With those amounts and assuming no other income, you would be either barely into the 15% bracket or at the top of the 10%, depending on the exact amount of tIRA withdrawals.

If your actual income now incurs a 25% or higher marginal tax rate, you could save the 10-15% difference between contribution and withdrawal tax rates.
How did you come up with this? If you assume $1 million tRA at 3.65% that's 36500. I'm guessing you backed out std deuction and 2 exemptions for about $20800 which equals 15700 in taxable income?

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FiveK
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Re: Contributing to tax deferred as you approach retirement

Post by FiveK » Thu Aug 17, 2017 9:34 pm

JBTX wrote:
Thu Aug 17, 2017 5:18 pm
FiveK wrote:
Thu Aug 17, 2017 2:33 pm
With those amounts and assuming no other income, you would be either barely into the 15% bracket or at the top of the 10%, depending on the exact amount of tIRA withdrawals.

If your actual income now incurs a 25% or higher marginal tax rate, you could save the 10-15% difference between contribution and withdrawal tax rates.
How do you get that? Let's say I have 1.2 million, in today's dollars, in the tIRAs. Assume I was old enough to take RMDs now. I found an RMD calculator that says I'd need to pull out about $57k. Does that sound right? That would be in the 15% rate but closer to the top than bottom of the bracket.

I really need to put this all in a spreadsheet and see how it works out. But I get your point.
For MFJ with no dependents, both under age 65 and using a 4% withdrawal ratio, with only tIRA withdrawals for income, $986,250 puts them at the very top of the 10% bracket.

If you want to develop a spreadsheet, you could start with (or use) Tools and calculators - Personal_finance_toolbox - Bogleheads.

An RMD of $57K with a $1.2MM balance implies you are 77 years old, based on Publication 590-B (2016), Distributions from Individual Retirement Arrangements (IRAs) (table III at the very bottom of that document).

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FiveK
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Re: Contributing to tax deferred as you approach retirement

Post by FiveK » Thu Aug 17, 2017 9:37 pm

JBTX wrote:
Thu Aug 17, 2017 6:50 pm
How did you come up with this? If you assume $1 million tRA at 3.65% that's 36500. I'm guessing you backed out std deuction and 2 exemptions for about $20800 which equals 15700 in taxable income?
Pretty much. $18,650 is the top of the 10% bracket. See the tables in cells 'Calculations'!T1:U28 in the spreadsheet mentioned in the previous post.

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Re: Contributing to tax deferred as you approach retirement

Post by JBTX » Thu Aug 17, 2017 10:29 pm

I built a spreadsheet starting with $1 million in tIRA, grew it 3% real, and assumed some additional contributions over next 15 years, then applied first year RMD and came up with about $64,000 first year RMD, in today's dollars, which puts me just within the 15% bracket.

Then I tried to calculate the SS taxability impact, and I'm totally confused on that. I looked at some online calculators, looked at the wiki, and toyed with "the Hump" and I just don't fundamentally understand how the details work - and I can't reconcile what the explanations are telling me. I guess I'll have to save that for another day.

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FiveK
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Re: Contributing to tax deferred as you approach retirement

Post by FiveK » Thu Aug 17, 2017 10:53 pm

JBTX wrote:
Thu Aug 17, 2017 10:29 pm
Then I tried to calculate the SS taxability impact, and I'm totally confused on that. I looked at some online calculators, looked at the wiki, and toyed with "the Hump" and I just don't fundamentally understand how the details work - and I can't reconcile what the explanations are telling me. I guess I'll have to save that for another day.
Yeah, that's not immediately obvious. Cells X31:AE50 in the Calculations tab of
Tools and calculators - Personal_finance_toolbox - Bogleheads do the IRS calculations. The charts in Taxation of Social Security benefits - Bogleheads came from that.

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Re: Contributing to tax deferred + Taxability of SS

Post by JBTX » Fri Aug 18, 2017 2:29 pm

As to taxability of social security - I was using this online calculator:

https://www.fool.com/retirement/social- ... taxed.aspx

As stated in an above post, I am estimating I would have first year RMD's of $64,000, in today's dollars, which would put my in the bottom end of the 15% tax bracket. Assume for this exercise I have no other taxable income and no tax free muni's (which will probably be close to true)

Also, I'm assuming 40,000 of social security benefits for me when I turn 70, and 40,000 for my wife. Both of us waiting to 70 to collect. In reality, it won't play out exactly this way, as she is 5 years younger than I, but just doing this for the exercise. That would give 80,000 total of social security if we both wait to 70 years old (which seems high, but at least for me that is what the calculator says and she ought to be just about as high)

The 64,000 of taxable income above puts me in the very bottom of the 15% tax bracket, if my calcs are correct. Assumed 65+ standard deduction and exemptions.

Now the calculator says:

at 64K income - my estimated RMD's, 80K SS income, and 15% marginal rate, the tax is $8550
at 75.9K RMD- (assume I contribute more to tIRA's or this grows more than expected) income, 80K SS, and 15% marginal rate (this is the cutoff between 15 and 25% tax rates...I think the tax is $10,067.

The difference in taxes from the two scenarios is $1517 on incremental income of $11,900, for a marginal rate of 13% for that range.

My assumption is this calculator is only calculating the taxes on the social security, correct?

So this would mean our marginal tax rate in this range is 15%+13% = 28%...correct?

Now if somehow my RMD increased to 80K (unexpected 20 year market boom!), This would put me in the 25% tax bracket. Putting all that in the calculator gives 17,000. My income increased $4100 but my SS taxes increase $6933!!!??? That can't be right, can it?

I'm really struggling to understand how this calculation works. I have looked at the wiki and it just made me more confused. Everybody keeps saying that once you pass a relatively low income, the SS tax calculation really isn't a factor. But what i am seeing above is that I would be in a combined marginal rate of 28%, and if income increased could jump to some absurdly high marginal rate - which I am sure must be user error.

Help!!!!

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FiveK
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Re: Contributing to tax deferred + Taxability of SS

Post by FiveK » Fri Aug 18, 2017 2:59 pm

JBTX wrote:
Fri Aug 18, 2017 2:29 pm
As to taxability of social security - I was using this online calculator:

https://www.fool.com/retirement/social- ... taxed.aspx
Not sure how that works from a quick glance. Some folks prefer web sites, others prefer spreadsheets, etc. I like to see the calculations and assumptions but YMMV.
Also, I'm assuming 40,000 of social security benefits for me when I turn 70, and 40,000 for my wife. Both of us waiting to 70 to collect. In reality, it won't play out exactly this way, as she is 5 years younger than I, but just doing this for the exercise. That would give 80,000 total of social security if we both wait to 70 years old (which seems high, but at least for me that is what the calculator says and she ought to be just about as high)
Those amounts are plausible if you both are at or near the maximum lifetime SS contribution. See Maximum-taxable benefit examples.
Assumed 65+ standard deduction and exemptions.
Now the calculator says:
at 64K income - my estimated RMD's, 80K SS income, and 15% marginal rate, the tax is $8550
$15,903 according to the wiki "toolbox" reference.
at 75.9K RMD- (assume I contribute more to tIRA's or this grows more than expected) income, 80K SS, and 15% marginal rate (this is the cutoff between 15 and 25% tax rates...I think the tax is $10,067.
$21,406 according to the wiki "toolbox" reference.
The difference in taxes from the two scenarios is $1517 on incremental income of $11,900, for a marginal rate of 13% for that range.
My assumption is this calculator is only calculating the taxes on the social security, correct?
So this would mean our marginal tax rate in this range is 15%+13% = 28%...correct?
(21406 - 15903) / (75900 - 64000) = 46.24%
That's consistent with the following, which assumes the $80K of SS income and calculates the marginal rates of tIRA withdrawals.
Image

If you are at all spreadsheet-adept, I encourage looking at that spreadsheet, perhaps along with the IRS forms, to see how things work.

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Re: Contributing to tax deferred + Taxability of SS

Post by JBTX » Fri Aug 18, 2017 3:15 pm

FiveK wrote:
Fri Aug 18, 2017 2:59 pm
JBTX wrote:
Fri Aug 18, 2017 2:29 pm
As to taxability of social security - I was using this online calculator:

https://www.fool.com/retirement/social- ... taxed.aspx
Not sure how that works from a quick glance. Some folks prefer web sites, others prefer spreadsheets, etc. I like to see the calculations and assumptions but YMMV.
Also, I'm assuming 40,000 of social security benefits for me when I turn 70, and 40,000 for my wife. Both of us waiting to 70 to collect. In reality, it won't play out exactly this way, as she is 5 years younger than I, but just doing this for the exercise. That would give 80,000 total of social security if we both wait to 70 years old (which seems high, but at least for me that is what the calculator says and she ought to be just about as high)
Those amounts are plausible if you both are at or near the maximum lifetime SS contribution. See Maximum-taxable benefit examples.
Assumed 65+ standard deduction and exemptions.
Now the calculator says:
at 64K income - my estimated RMD's, 80K SS income, and 15% marginal rate, the tax is $8550
$15,903 according to the wiki "toolbox" reference.
at 75.9K RMD- (assume I contribute more to tIRA's or this grows more than expected) income, 80K SS, and 15% marginal rate (this is the cutoff between 15 and 25% tax rates...I think the tax is $10,067.
$21,406 according to the wiki "toolbox" reference.
The difference in taxes from the two scenarios is $1517 on incremental income of $11,900, for a marginal rate of 13% for that range.
My assumption is this calculator is only calculating the taxes on the social security, correct?
So this would mean our marginal tax rate in this range is 15%+13% = 28%...correct?
(21406 - 15903) / (75900 - 64000) = 46.24%
That's consistent with the following, which assumes the $80K of SS income and calculates the marginal rates of tIRA withdrawals.
Image

If you are at all spreadsheet-adept, I encourage looking at that spreadsheet, perhaps along with the IRS forms, to see how things work.
Yeah I am pretty good with spreadsheets. I downloaded that file last night, but only gave it a glance. The problem is I am not sure what it is doing and how it relates to taxability of social security, but I'll give it another look.

As to the linked motley fool calculator - this other calculator came up with the same thing

https://www.calcxml.com/calculators/how ... n=#results

Thus my confusion of how these calculators come up with something different than the tool you are using - pretty dramatically different.

Now one problem with my methodology is I am working in today's dollars. However, the taxability of social security brackets don't change with inflation, so that may very well be causing some distortion.

If your calculations are correct, then traditional IRA/401K contributions aren't advantageous for us vs Roth, and maybe even worse within a range - assuming we are in 25-28% range currently. That is kind of opposite of what everybody here has been saying that SS tax isn't a factor except for low incomes in retirement. I'm sure I am missing something.

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Re: Contributing to tax deferred + Taxability of SS

Post by JBTX » Fri Aug 18, 2017 3:24 pm

Also, while it is typically advantageous to defer retirement to 70 if you can afford and are of average health or better, do the taxability of social security benefits modify that calculus in some instances?

Again if your calculations could be correct, and nothing changes in tax law in 16 years (good luck with that!) then it could be possible to pull some of that IRA income out between retirement and age 70, depending on what other income we may have, whether we are still working or not, etc, which if enough could lower us into a lower RMD amount and avoid that "hump".

I just want to get a better understanding of the specifics of the calculations. Right now it is a black box to me.

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Re: Contributing to tax deferred + Taxability of SS

Post by House Blend » Fri Aug 18, 2017 3:29 pm

JBTX wrote:
Fri Aug 18, 2017 2:29 pm
As to taxability of social security - I was using this online calculator:

https://www.fool.com/retirement/social- ... taxed.aspx

As stated in an above post, I am estimating I would have first year RMD's of $64,000, in today's dollars, which would put my in the bottom end of the 15% tax bracket. Assume for this exercise I have no other taxable income and no tax free muni's (which will probably be close to true)

[snip]
Help!!!!
I took a look at that Fool calculator. It's flawed--use at your own risk.

The first sign that they've done something stupid is that they ask for your "marginal tax bracket". Big mistake, because you can't determine that without first determining how much of your SS income is taxable. Trying it a couple of ways, I see that they give different answers for "estimated taxes due" depending on what you put for your bracket.

If you want to salvage something out of it, the line where it reports how much of your SS benefit is taxable is correct. In your simplified situation: $64,000 IRA RMD, $80,000 SS income, and no other income or adjustments, $57,000 of your SS is taxable.

So your AGI would be $64K + $57K = $121,000.

Now, as to what tax bracket you'd be in, it depends on how much you claim in the way of deductions + exemptions. If you take two exemptions plus the standard deduction for MFJ both over age 65, that would be 2 x $4050 + $15200 = $23,300 in 2017.

So your Taxable Income would be $97,700.
That's well into the 25% bracket.
In 2017, tax due would be ~ $15,900.
Your marginal tax rate would be 46.25%.

With $80,000 SS income, you need at least $76,941 of "other income" (RMDs, tax-exempt interest, LTCG, etc) to make this artifically high marginal tax rate go away.

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Re: Contributing to tax deferred + Taxability of SS

Post by JBTX » Fri Aug 18, 2017 4:21 pm

House Blend wrote:
Fri Aug 18, 2017 3:29 pm
JBTX wrote:
Fri Aug 18, 2017 2:29 pm
As to taxability of social security - I was using this online calculator:

https://www.fool.com/retirement/social- ... taxed.aspx

As stated in an above post, I am estimating I would have first year RMD's of $64,000, in today's dollars, which would put my in the bottom end of the 15% tax bracket. Assume for this exercise I have no other taxable income and no tax free muni's (which will probably be close to true)

[snip]
Help!!!!
I took a look at that Fool calculator. It's flawed--use at your own risk.

The first sign that they've done something stupid is that they ask for your "marginal tax bracket". Big mistake, because you can't determine that without first determining how much of your SS income is taxable. Trying it a couple of ways, I see that they give different answers for "estimated taxes due" depending on what you put for your bracket.

If you want to salvage something out of it, the line where it reports how much of your SS benefit is taxable is correct. In your simplified situation: $64,000 IRA RMD, $80,000 SS income, and no other income or adjustments, $57,000 of your SS is taxable.

So your AGI would be $64K + $57K = $121,000.

Now, as to what tax bracket you'd be in, it depends on how much you claim in the way of deductions + exemptions. If you take two exemptions plus the standard deduction for MFJ both over age 65, that would be 2 x $4050 + $15200 = $23,300 in 2017.

So your Taxable Income would be $97,700.
That's well into the 25% bracket.
In 2017, tax due would be ~ $15,900.
Your marginal tax rate would be 46.25%.

With $80,000 SS income, you need at least $76,941 of "other income" (RMDs, tax-exempt interest, LTCG, etc) to make this artifically high marginal tax rate go away.

This is actually very helpful and kind of helps frame the issue for me - adding the taxable portion of SS into AGI makes sense, then it is just a question of figuring out what percent is taxable - which you are saying that is the one thing that link does correctly.

As I mentioned earlier, it seems like the general coscensus on here is traditional contributions are typically better for most in order to fill lower brackets in retirement, and also I thought it was said that the taxability of SS was only an issue for lower levels of retirement income. If so, what is the difference in our situation that makes this not the case?

Would you agree that in our case, given the limited information given - that further traditional contributions are not advantageous for us vs. Roth, and may actually be disadvantageous?

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FiveK
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Re: Contributing to tax deferred + Taxability of SS

Post by FiveK » Fri Aug 18, 2017 4:31 pm

JBTX wrote:
Fri Aug 18, 2017 3:15 pm
FiveK wrote:
Fri Aug 18, 2017 2:59 pm
If you are at all spreadsheet-adept, I encourage looking at that spreadsheet, perhaps along with the IRS forms, to see how things work.
Yeah I am pretty good with spreadsheets. I downloaded that file last night, but only gave it a glance. The problem is I am not sure what it is doing and how it relates to taxability of social security, but I'll give it another look.
On the Calculations tab enter the following in the given cells:
G2: 2
G3: 2
G8: 70
H8: 70
B39: =80000/12
B25: =64000/12
That should give you the $15,903 tax in cell G32 (and a few others). With any luck that will be enough to get you started. I may be able to answer some questions about it. In-depth things should probably be asked in the forum where it's hosted.

To generate the chart using tIRA withdrawals (cell B25) as the independent variable, see the Instructions tab, cell B15 and following.
Last edited by FiveK on Fri Aug 18, 2017 5:20 pm, edited 1 time in total.

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FiveK
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Re: Contributing to tax deferred + Taxability of SS

Post by FiveK » Fri Aug 18, 2017 4:43 pm

JBTX wrote:
Fri Aug 18, 2017 4:21 pm
Would you agree that in our case, given the limited information given - that further traditional contributions are not advantageous for us vs. Roth, and may actually be disadvantageous?
Much depends on your plans for the next ~16 years (from current age 54 to age 70). If you plan to work full time, at some point further traditional contributions will indeed not be advantageous.

If you plan to stop working "soon" then traditional contributions may still be advantageous because you can do Roth conversions at lower marginal tax rates before you start SS.

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Re: Contributing to tax deferred + Taxability of SS

Post by JBTX » Fri Aug 18, 2017 4:54 pm

Thanks a lot I'll give the model a try.

As to our situation lots could change, as well as tax code, so it is indeed all hypothetical at this point. For the time being we will probably continue funding wife's traditional 401k with small 10% match on all contributions and for my self employed 401k mostly emphasize Roth to the extent I contribute at all, and of course fund Indiv Roth to the extent liquidity permits.

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Re: Contributing to tax deferred + Taxability of SS

Post by FiveK » Fri Aug 18, 2017 5:22 pm

JBTX wrote:
Fri Aug 18, 2017 4:54 pm
Thanks a lot I'll give the model a try.
I fixed a typo: cell H8 can be 70, not 80.

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Re: Contributing to tax deferred + Taxability of SS

Post by JBTX » Fri Aug 18, 2017 5:31 pm

Another partially unrelated question. I could probably figure this out with online SS Calculators.

Does it make a big difference in my ultimate social security payments if I scale back over the next 10-12 years and make 50-60k vs maybe 120k a year or more? Most of my 30 work history has been over the social security maximum income for FICA.

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FiveK
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Re: Contributing to tax deferred + Taxability of SS

Post by FiveK » Fri Aug 18, 2017 5:40 pm

JBTX wrote:
Fri Aug 18, 2017 5:31 pm
Another partially unrelated question. I could probably figure this out with online SS Calculators.

Does it make a big difference in my ultimate social security payments if I scale back over the next 10-12 years and make 50-60k vs maybe 120k a year or more? Most of my 30 work history has been over the social security maximum income for FICA.
Probably not much difference. There is a also a SocialSecurity tab in that spreadsheet (or one of the ss.gov calculators) that would give specific numbers.

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Re: Contributing to tax deferred + Taxability of SS

Post by JBTX » Fri Aug 18, 2017 5:50 pm

Thanks!

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Re: Contributing to tax deferred + Taxability of SS

Post by KlangFool » Wed Sep 13, 2017 8:12 am

OP,

1) You have 150K in nonretirement savings.

2) You have about 1 million in Roth and you are 54 years old.

3) You have 2 kids going to college with 60K in 529.

Looking at this picture,

A) In summary, you will be spending a lot of money over the next few years. Assuming 30K per year per kid, this is about 240K for the 2 kids' college education.

B) Depending on your tax situation every year, it may or may not be worthwhile to contribute to the Trad. 401K. Please note that if your AGI is low enough, you may even qualify for tax credits.

For example, you could contribute to Trad. 401K and spend your pre-existing Roth contribution.

C) I do not understand the part of RMD problem. With 1 million in Roth, you could spend from Roth and do Roth conversion between now and 70 years old.

You want to do a "cash flow" analysis to see how all this turn out.

KlangFool

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