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Posted by Una on September 18, 2007, 11:43 pm
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>I would add that the "standard" argument for deferring taxes in 401(k)s is
>that most people will earn less in retirement than while actually working.
Yes but...
That begs a key question: when do you plan to retire? I expect I will
still be working when I reach the age of mandatory withdrawals from my
retirement accounts, in which case I may be in a pretty high tax bracket
too. So during a year when my income was low ('cause I lost my job), I
took the opportunity to convert all my 401(k)s to an IRA then to a Roth
IRA. And paid the tax on the lump out of my low income (ouch), which
in a sense means I saved that much more. But the *real* reason I got
rid of the 401(k)s was they were with Fidelity and I intensely disliked
their statements. Unreadable.
Una
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Posted by Andrew DeFaria on September 19, 2007, 2:06 am
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Una wrote:
> Yes but...
>
> That begs a key question: when do you plan to retire? I expect I will
> still be working when I reach the age of mandatory withdrawals from my
> retirement accounts, in which case I may be in a pretty high tax
> bracket too.
The age of mandatory withdrawals is 70 1/2. Do you really think you'll
be making more @ 70 1/2 than you are now? I don't.
> So during a year when my income was low ('cause I lost my job), I took
> the opportunity to convert all my 401(k)s to an IRA then to a Roth
> IRA. And paid the tax on the lump out of my low income (ouch), which
> in a sense means I saved that much more.
Not necessarily. The power of the Roth is that you get to withdraw your
retirement savings tax free. That is provided the government doesn't
change their mind down the road and decide to tax those withdrawals in
the future. Don't think it can happen? Trust your government? Sure you
can trust your government - just ask a Native American about how much
you can trust your government! I smile when the Native American's open
up casinos and are finally getting a little bit of revenge...
> But the *real* reason I got rid of the 401(k)s was they were with
> Fidelity and I intensely disliked their statements. Unreadable.
I just (today) drained my Fidelity funds to move into a new Sep-IRA
(glad the market did well today). I told the Fidelity rep that I had
asked for an accounting of my funds 3 times and they failed to deliver -
so I'm voting with my feet...
--
Andrew DeFaria <http://defaria.com>
In my house, on the ceilings I have paintings of the rooms above...so I
never have to go upstairs.
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Una wrote:<br>
but...<br>
<br>
That begs a key question: when do you plan to retire? I expect I will
still be working when I reach the age of mandatory withdrawals from my
retirement accounts, in which case I may be in a pretty high tax
bracket too. </blockquote>
The age of mandatory withdrawals is 70 1/2. Do you really think you'll
be making more @ 70 1/2 than you are now? I don't.<br>
during a year when my income was low ('cause I lost my job), I took the
opportunity to convert all my 401(k)s to an IRA then to a Roth IRA. And
paid the tax on the lump out of my low income (ouch), which in a sense
means I saved that much more. </blockquote>
Not necessarily. The power of the Roth is that you get to withdraw your
retirement savings tax free. That is provided the government doesn't
change their mind down the road and decide to tax those withdrawals in
the future. Don't think it can happen? Trust your government? Sure you
can trust your government - just ask a Native American about how much
you can trust your government! I smile when the Native American's open
up casinos and are finally getting a little bit of revenge...<br>
the *real* reason I got rid of the 401(k)s was they were with Fidelity
and I intensely disliked their statements. Unreadable.<br>
</blockquote>
I just (today) drained my Fidelity funds to move into a new Sep-IRA
(glad the market did well today). I told the Fidelity rep that I had
asked for an accounting of my funds 3 times and they failed to deliver
- so I'm voting with my feet...<br>
<div class="moz-signature">-- <br>
<a href="http://defaria.com">Andrew DeFaria</a><br>
<small><font color="#999999">In my house, on the ceilings I have
paintings of the rooms above...so I never have to go upstairs.</font></small>
</div>
</body>
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Posted by Una on September 19, 2007, 11:03 am
Please log in for more thread options >The age of mandatory withdrawals is 70 1/2. Do you really think you'll
>be making more @ 70 1/2 than you are now? I don't.
In my case, almost certainly.
Re the "savings" of paying taxes now instead of later, consider this:
By putting $2000 in a pre-tax IRA you set aside $2000 now.
By putting $2000 in a Roth IRA you set aside $2000 *plus* taxes now.
Una
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Posted by Andrew DeFaria on September 19, 2007, 11:37 am
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Una wrote:
>> The age of mandatory withdrawals is 70 1/2. Do you really think
>> you'll be making more @ 70 1/2 than you are now? I don't.
> In my case, almost certainly.
Really? Now I'm curious. Exactly what do you do that gets you so much
more salary at 70 1/2 than at (what's your age now?)? I just gotta know!
> Re the "savings" of paying taxes now instead of later, consider this:
> By putting $2000 in a pre-tax IRA you set aside $2000 now.
> By putting $2000 in a Roth IRA you set aside $2000 *plus* taxes now.
Sorry you lost me there. What exactly does "*plus* taxes now" mean? Oh I
fully understand that money placed in a Roth is after tax so you've
already paid the tax. But again, you're banking on the fact that the
government doesn't change it's mind and say pass a law when you say turn
70 stating that people in high earning brackets, as you say you'll be,
will have their Roth IRAs taxed "slightly" since the dumb American
public thinks you already have too much. That could happen. Then you've
already paid taxes when contributing to the Roth and you're paying it on
the back end too.
--
Andrew DeFaria <http://defaria.com>
(A)bort, (R)etry, (G)et a beer?
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Una wrote:
DeFaria <a class="moz-txt-link-rfc2396E"
<blockquote type="cite">The age of mandatory withdrawals is 70 1/2.
Do you really think you'll be making more @ 70 1/2 than you are now? I
don't.<br>
</blockquote>
In my case, almost certainly.<br>
</blockquote>
Really? Now I'm curious. Exactly what do you do that gets you so much
more salary at 70 1/2 than at (what's your age now?)? I just gotta know!<br>
the "savings" of paying taxes now instead of later, consider this:<br>
By putting $2000 in a pre-tax IRA you set aside $2000 now.<br>
By putting $2000 in a Roth IRA you set aside $2000 *plus* taxes now.<br>
</blockquote>
Sorry you lost me there. What exactly does "*plus* taxes now" mean? Oh
I fully understand that money placed in a Roth is after tax so you've
already paid the tax. But again, you're banking on the fact that the
government doesn't change it's mind and say pass a law when you say
turn 70 stating that people in high earning brackets, as you say you'll
be, will have their Roth IRAs taxed "slightly" since the dumb American
public thinks you already have too much. That could happen. Then you've
already paid taxes when contributing to the Roth and you're paying it
on the back end too.<br>
<div class="moz-signature">-- <br>
<a href="http://defaria.com">Andrew DeFaria</a><br>
<small><font color="#999999">(A)bort, (R)etry, (G)et a beer?</font></small>
</div>
</body>
</html>
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Posted by Brian on September 19, 2007, 12:28 pm
Please log in for more thread options Andrew DeFaria wrote:
> But again, you're banking on the fact that the
> government doesn't change it's mind and say pass a law when you say turn
> 70 stating that people in high earning brackets, as you say you'll be,
> will have their Roth IRAs taxed "slightly" since the dumb American
> public thinks you already have too much. That could happen. Then you've
> already paid taxes when contributing to the Roth and you're paying it on
> the back end too.
IMHO, very possible, like taxable social security benefits for those
rich individuals making more than $25,00 and rich couples making more
than $32,000. :)
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