Message Font: Serif | Sans-Serif
No. of Recommendations: 0
I'm looking for guidance. This is a pretty tough situation and I have yet to find an "expert" capable of understanding the question, less yet all the twists to the answer. Anyone's input is welcome.

In 1998 we should have an AGI of $115,000 (mom, dad, 2 kids under 5). I have a 401K at my previous employer of over $500,000 that I can roll into an IRA with a weeks notice. I have an IRA with about $30K and a 401K at my present employer of about $30K. We have no other savings to speak of. We live in Texas where there is no state income tax.

I am considering selling the house (about $30K equity) and moving to Boston or Palo Alto, Ca. in August, 1999 to get an MBA at either Harvard or Stanford, respectively (assuming I can get in). I'd estimate that I will have about $60K AGI for 1999 before we'd move.

The question is, what is the best strategy for minimizing taxes. I'm pretty sure that rolling the 401K monies into a self directed IRA is the best thing... given that I can take out the education expenses (estimated at over $60K/year for these two programs). I'm concerned about the state taxes of Mass. or Ca. kicking in.

To add a further twist, Harvard (my first choice) has a new program that allows starting in January '00 instead of Aug '99 (no summer break though). Should I just work the full year 1999 and be a student with no income for '00 other than taking money out of my plans.

All helpful comments are appreciated.
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.