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Investing/Strategies / Retirement Investing
|Subject: Response to zgriner's post||Date: 5/1/1999 7:28 AM|
|Author: dharmadollars||Number: 10265 of 80007|
Hi Zev. In your post #10029 you questioned my scenario of sheltering taxable IRA income with additional mortgage interest. Sorry for the delay. Work is the curse of the drinking class. Please bear with me through the detail required to respond to your observations.
First, all financial/asset planning decisions are contextual, i.e., they become good or bad decisions relative to "the particularity of objective conditions" they are intended to address. There is no such thing as a good investment or a good investment strategy. There are only good investments/strategies for a particular person in a particular situation with a particular set of goals. That said, let me move on.
In your post you suggest that I have proposed structuring a home equity loan to offset the taxable income from an IRA/401k. You then propose some terms for that loan. First, and not to be picky, but a home equity loan at 10% simple interest is higher than what is currently available. Second, per my tirade above, I would generally recommend a HEL or HELOC in peculiar situations. My weapon of choice would generally be a 30 year fixed rate loan. Hang in there; this IS going someplace.
Consider the following assumptions, which are part of the "particularity of objective conditions".
1. Mandatory withdrawals means age 70.5
2. Life expectancy of at least 15 years.
3. Significant alternative income making IRA $ "extra" ; amount at issue: $5,000 per year(this whole discussions springs from the problem of what to do with unneeded, taxable, mandatory income)
4. 28% mrgainal federal tax bracket, 7.5% state; combined bracket at the margin: 33.4%.
5. House worth at least $100,000 owned free and clear.
6. With property taxes, charitable deductions and long term care insurance premiums, our prota