Investment

» allancoleman - Roth conversions to avoid RMD's.

In response to Roth conversions to avoid RMD's. posted by Happy_2:

What I'm doing sounds better to me , Happy_2 . And If you'd prefer to use Vanguard's calculator to determine whether to do a Roth conversion or not is totally up to you . And there are many other Roth calculators on the Roth web site link I gave above .

So far , Happy_2 , my " gut feeling " has produced the critical mass I presently enjoy and I think I'll stick with it for awhile longer . And my math tells me that it's very worth while to do my Roth conversions at the 14% effective tax rate now rather than to wait til later . Each investor has to decide that for themselves .

Happy investing , Happy_2 . . It's been nice chatting with ya .

-- posted by allancoleman

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» allancoleman - post #236 revised: Current Means Test could be Prelude to More

In response to post #236 revised: Current Means Test could be Prelude to More posted by smile_1:

To get this forum back on topic , smile_1 , , now that I have a much better idea what effect that the " Social Security Benefits Worksheet Form 1040 Line 20 " line a , " total net benefits from box 5 of all Forms SSA - 1099 " has on my 1040 tax return , I wonder what effect that Line c " total Medicare Premium withheld form all Forms SSA - 1099 " has . ? ? What kind of number might that be . ? ?

Would be interesting to hear from Medicare folks too on that number . Anyone have an idea what I can plug in there to play with that too . ? ?

-- posted by allancoleman

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» smile_1 - post #236 revised: Current Means Test could be Prelude to More

In response to post #236 revised: Current Means Test could be Prelude to More posted by allancoleman:

To convert, or not to convert: that is the question:
Whether 'tis nobler in the mind to suffer
The slings and arrows of outrageous future taxes,
Or to take control today against a sea of troubles,
And by opposing end them?
_______

I am glad you all ended by agreeing to disagree

Different strokes for different folks, but I think most people can see if they can convert at a reasonable effective tax rate now while the Bush tax cuts are still around, does anyone think that taxes will be lower across the board in the future than they are currently, with an estimated unfunded liability for SS of 15 Trillion @ 2006 not to mention medicare's unfunded liability of $29 Trillion as of 2006. http://www.fms.treas.gov/fr/06frusg/06fr...

______

allan I'm not sure but I think whatever the medicare premium is one would have the opportunity to pay that monthly amount out of social security - what is it 93.5/month depending on your income, I have no clue how this would impact.

means testing of medicare premiums hmmmmmmmmm... sounds like congress is getting a Willie Sutton moment... http://www.tscl.org/NewContent/102589.asp ... just wait till they figure out the opportunities for further means testing SS as discussed in previous posts. Pay me now or Pay me much more later is definitely in play.

-- posted by smile_1

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» allancoleman - post #236 revised: Current Means Test could be Prelude to More

In response to post #236 revised: Current Means Test could be Prelude to More posted by smile_1:

It's very easy for me to agree to disagree with anyone else , smile_1 , cause I really don't care what anyone else is doing . I'm going to do my own thing anyway .

On the Medicare premium number , I'll plug in that cost that's current now and see what effect that has on my 1040 bottom line . I'll start with that 93.50 / month number and see what effect that has .

-- posted by allancoleman

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» allancoleman - post #236 revised: Current Means Test could be Prelude to More

In response to post #236 revised: Current Means Test could be Prelude to More posted by smile_1:

Adding a total of $1,122 ( $93.50 x 12 ) to that Medicare premium line doesn't change my " taxable Social Security benefit " from $15,065 on a total year's benefit of $17,724 , smile_1 . And that sounds right in line with me paying taxes on 85% of my Social Security benefit check .

Sounds like for me , this whole exercise just adds $15,065 to my bottom line income .

One thing about your bringing this whole subject up , smile_1 , is that I feel alot more comfortable in my planning going forward for my Roth conversion strategy I already had in place before I started being a Social Security beneficiary . I'll just make room for the taxable portion of my Social Security check and should be able to still maintain my lower effective tax rate . Think I'll play with that now and see what kind of Roth conversion amount would lower that rate from 14.19% to less than 14% . ? ?

Boy , I sure love this TurboTax for tax planning .

-- posted by allancoleman

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» smile_1 - post #236 revised: Current Means Test could be Prelude to More

In response to post #236 revised: Current Means Test could be Prelude to More posted by allancoleman:

allan the good news for now is even with the current method of means testing SS, you will still recoup what you paid in via FICA tax at about year 6. After yr 6 you start recouping your employers piece assuming of course that Congress does not have an epiphany and create another Willie Sutton moment and means test out all but the 15% portion you put in. If they did this and you are caught in the "deep" pocket means test, your check could drop to 15% of 1477/month or 221.55, just enough to pay your means tested medicare premium

Don't worry, they probably won't figure this out for another 6 or 7 years

-- posted by smile_1

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» allancoleman - post #236 revised: Current Means Test could be Prelude to More

In response to post #236 revised: Current Means Test could be Prelude to More posted by smile_1:

WOW , smile_1 , IF I change last year's Roth conversion from $100,681 to $85k for this tax year , it brings my effective tax rate from last year's 14.19% down to 14.12% AND IF I change that proposed $85k Roth conversion figure down to $80k , it changes my effective tax rate to 13.57% . And this is with keeping my Social Security annual benefit check of $17,724 in plus a Medicare premium of $93.50 a month .

IF you can run me down in either Alaska or Hawaii , smile_1 , I'll buy you and yours dinner in the place of your choice .

And you're right on your above post , smile_1 , it's going to take'em awhile to figure out how to make this stuff cost us more or how to totally make sure that we don't get any of it . In the meanwhile , I'll just keep on keeping on socking money away in taxfree forever Roths under current tax code . Works for me .

-- posted by allancoleman

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» smile_1 - post #236 revised: Current Means Test could be Prelude to More

In response to post #236 revised: Current Means Test could be Prelude to More posted by allancoleman:

Good work allancoleman. It is good to know you have a choice regarding the effective tax rate. Tax software these days is essential to get a good look at "what if" scenarios.

I appreciate the dinner offer allan. The wife asked jokingly does that offer include airfare. We both got a kick out of that. Good to have a partner with the same mind set.

If we cross paths it will probably be in Hawaii, last time I was there was 20 years ago @ Kauai, but we passed through the big island on the way home as I recall, we stopped for a little lunch, I heard someone sneeze, I turned around and saw Jackie Stewart. No wonder they call it paradise, beautiful spot. If I miss you on the big island just pass it forward.

-- posted by smile_1

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» allancoleman - post #236 revised: Current Means Test could be Prelude to More

In response to post #236 revised: Current Means Test could be Prelude to More posted by smile_1:

Although I had never purposely attempted to achieve a certain effective tax rate in the past with my Roth conversions , I've just been staying in the " sweet spot " of aproximately $100k . Those done at $125k in the distant past cost me an effective tax rate of 22% and I've been working them down ever since depending on any particular real estate sales for that tax year . But I was surprised how easy it was to project the exact effective tax rate . And now that I've converted so much in the past , I can kind of go easy and maybe coast into RMD age . Just have to make sure I keep nibbling away at it cause I can sure see when RMD age 70 hits and I have to take that distribution , it'll be alot more difficult to get any more meaningful Roth conversions after that point .

Yes , smile_1 , it is nice to have a general agreement of the minds here on Suite101 . Especially after reading some of the arguements that can happen here on some of these forums .

Tell the wife , no airfare , but as you well know , I'll always be on the Big Island the most part of every winter because of our condo , vehicle , and other property calling us over every time winter begins up here in the Great White North . So maybe we will see each other in paradise sometime . And there's always Alaska . With my expensive holdings still left up here , I don't expect to be out of here to move to Hawaii full time for another ten years yet . I've got to pretty much get all my deferred accounts converted or depleted before moving to Hawaii full time because of their personal income tax structure . Fortunately Hawaii follows federal tax code and doesn't tax Roths either .

Anyway , thanks for keeping this Social Security forum on the front burner cause more and more of us will be affected by it over time .

-- posted by allancoleman

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» Chgo - Reapply for More Money with SS, for free

I'm not sure if this was posted in another forum, but I was told about this today, and it could be important enough for some people, for a double posting .

Reapply for Social Security

Somebody told me about this today, and showed me a
newspaper article. It's for real!

If you qualify for higher payments at your current age, and took
benefits early, you can pay it back, and re-apply! No penalty---no
interest........free money from our govt!

http://www.forbes.com/2008/02/07/retirem...

http://www.esplanner.com/Case%20Studies/...

-- posted by Chgo

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