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Any Tidbits on Reducing Income for 2,3 Years?

Posted: Fri Nov 15, 2019 5:01 am
by mur44
I will be converting IRA amounts to Roth over the next
2, 3 years. Please note that I am investing most of my funds in CDs.
I am looking for ways to reduce interest income for a few years without taking undue risk,
primarily for IRMAA savings.

I am looking at the following options:
(1) Buy Gold Coins and hold them
(2) Buy a Condo
(3) Buy Single Premium Life Insurance
(4) Give money to children
(5) Buy Qualified Opportunity Fund (Risk Level Unknown)

Any suggestions would be appreciated.

Re: Any Tidbits on Reducing Income for 2,3 Years?

Posted: Fri Nov 15, 2019 6:18 am
by aerosurfer
Are you retired?

How about stop working or going part time?

Re: Any Tidbits on Reducing Income for 2,3 Years?

Posted: Fri Nov 15, 2019 6:39 am
by mur44
I am already retired; Thanks for your quick response.

I am not sure about the risks associated with "Qualified Opportunity Fund s".

Re: Any Tidbits on Reducing Income for 2,3 Years?

Posted: Fri Nov 15, 2019 7:10 am
by livesoft
Ditch the CDs which are creating income. Put your money in a non-interest-bearing account.

Otherwise non-dividend-paying equities create no income.

While I like to pay no- or low income taxes, I don't create a cost higher than the taxes I would have to pay.

Re: Any Tidbits on Reducing Income for 2,3 Years?

Posted: Fri Nov 15, 2019 8:37 am
by HomeStretch
mur44 wrote:
Fri Nov 15, 2019 6:39 am
I am not sure about the risks associated with "Qualified Opportunity Fund s".
I have read recent press about Qualified Opportunity Zones (QOZ) allegedly being used to qualify higher-income people for tax breaks intended to benefit the poor. I don’t think I would invest in a QOZ fund or, if I did, I would do so recognizing the risk that tax break rules could be tightened if abuse is wide-spread.

Re: Any Tidbits on Reducing Income for 2,3 Years?

Posted: Fri Nov 15, 2019 7:14 pm
by mur44
Thanks for all the responses; I always learn something new on this forum.

Re: Any Tidbits on Reducing Income for 2,3 Years?

Posted: Fri Nov 15, 2019 8:19 pm
by Tamarind
I also think you would want to stick to risk free investments rather than reaching for more return while deferring the interest. There are loads of savings accounts out there that only pay 0.1-0.5% interest, but where your money remains completely safe and liquid.

Re: Any Tidbits on Reducing Income for 2,3 Years?

Posted: Fri Nov 15, 2019 8:24 pm
by retired@50
Buying a few (or more) shares of Berkshire Hathaway B class would seem less risky than buying gold to me... Since it doesn't pay a dividend... Otherwise, I suppose you could put some cash in a safe deposit box...

Best of luck,

Re: Any Tidbits on Reducing Income for 2,3 Years?

Posted: Fri Nov 15, 2019 8:26 pm
by fyre4ce
Municipal money market funds, or a short or intermediate term muni bond fund, would be a good place to park money that will not generate taxable income. (I know tax-free bond income affects Social Security taxation, but IRMAA is based on MAGI which is not increased by tax-free income.) Edit: I just learned that tax-free muni bond DOES count toward IRMAA, and that there is not just one MAGI but many, depending on the purpose.

You could also throw it into a tax-efficient stock fund. Yield should be low, even if the stocks go up, and if they go down then you can harvest the losses.

As someone else stated, don't let the tax tail wag the investment dog. If your after-tax income will be higher earning taxable interest (or whatever else your baseline plan would be) then just do that and be happy.

Re: Any Tidbits on Reducing Income for 2,3 Years?

Posted: Sun Nov 17, 2019 3:53 am
by fujiters
Move money into I and EE bonds (instead of non interest bearing account). You can only contribute $45k/year as a couple though ($10k/SSN/bond type plus $5k more from tax return). The interest is tax deferred until you cash out the bonds.