UnThreaded | Threaded | Whole Thread (2) | Ignore Thread Prev Thread | Next Thread
Author: goodfernuthin One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75782  
Subject: Tax Bracket Prediction Date: 10/23/1997 2:42 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Hi Pixy and Other Fools.


I am 49 years old and not employed outside of the home (although I am considering independent contracting at the
moment). My working spouse is 15 years older than me and
plans to retire (formally that is) on December 31, 1998.
We have over $200,00 in a 401K. I have about $50,000 in
IRA's and $13,000 in a tax deferred annuity, and my spouse
has about $15,000 in IRA's and about $70,000 in something
called an FSP (not taking sick leave incentive money). We
also have about $12,000 which I have invested in two separate portfolios of individual stocks (through a discount
broker). We also have about $30,000 in a tax free bond fund
(returned 9% last year). All investments add up to about $435,000 (I did a portfolio report with Quicken). I am responsible for the money management. Do I have a lot of questions?!!!

I need to plan tax stratagies. If I roll over some of my IRA funds to a Roth next year (in addition to the $2,000
new IRA contribution for that year), would it be a smart
move to spread the taxes due over four years, since we will
probably be in a lower tax bracket when my spouse retires?
The only problem with this is that my spouse has this idea
that my spouse will be greatly enriched indirectly by the
license of several of my spouses patents. A very cheerful
problem to be anticipated!


Also, we (I) need to plan what to do with the 401K plan funds. In addition to increased choices of funds in the plan, we also have the option of leaving the money in the
funds when my spouse retires. We, having received the projection of pension amount and social security benefits,
find that we will need to take some distributions from the 401K and/or IRA's as income. I have a financial planner
(he does not charge a fee, just gets a commision on funds
he sells, and yes he is a certified, passed the test, with
a masters degree, financial planner). He suggests that we
move the money from the 401 K funds into a managed fund,
managed by a fund manager which can be changed at any time
if we don't think the performance is acceptable. What do you
advise here, Pixie? Or can you recommend reference material, books etc. to help me?

To add a third question: What do you think of my becoming an independent contractor (part time sales) and itemizing business expenses separate from our personal retirement income? Would this help our tax situation? I know nothing
about reporting business expenses yet. Sorry the message
is so long, but you probably need a complete picture to
answer the questions. Thanks a million.

goodfernuthin (but gaining non the less)



Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 506 of 75782
Subject: Re: Tax Bracket Prediction Date: 10/23/1997 10:52 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Greetings, Goodfernuthin, and welcome to Fooldom.

<<I need to plan tax stratagies. If I roll over some of my IRA funds to a Roth next year (in addition to the $2,000 new IRA contribution for that year), would it be a smart move to spread the taxes due over four years, since we will probably be in a lower tax bracket when my spouse retires? >>

Actually, it's a moot point because you will have no choice in the matter. If you roll a traditional IRA to a Roth in 1998, you MUST spread the income and taxes over a four-year period.


<<Also, we (I) need to plan what to do with the 401K plan funds. In addition to increased choices of funds in the plan, we also have the option of leaving the money in the funds when my spouse retires. We, having received the projection of pension amount and social security benefits, find that we will need to take some distributions from the 401K and/or IRA's as income. I have a financial planner (he does not charge a fee, just gets a commision on funds he sells, and yes he is a certified, passed the test, with a masters degree, financial planner). He suggests that we move the money from the 401 K funds into a managed fund, managed by a fund manager which can be changed at any time if we don't think the performance is acceptable. What do you advise here, Pixie? Or can you recommend reference material, books etc. to help me? >>

No advice, just a comment. I prefer the flexibility afforded by the IRA. If I'm dissatisfied with returns or management of the money, I can switch at will. I can't do that easily within a 401k. Your CFP is right on with that point. Whether the investments he has recommended fit your risk tolerance and desires is for you to say.

<<To add a third question: What do you think of my becoming an independent contractor (part time sales) and itemizing business expenses separate from our personal retirement income? Would this help our tax situation? I know nothing about reporting business expenses yet. Sorry the message is so long, but you probably need a complete picture to answer the questions.>>

Help your tax situation in what regard? If the business is successful, you'll make money and have more income to declare. If it loses money, you'll garner some deductions. Which do you prefer? Your CFP knows your circumstances, so he should be able to offer some guidance to you in this regard. It's just not a question we can answer here with any degree of accuracy.

Investing in retirement poses some challenges to you. You want your stash to last, but you also want to take income. In that regard, you might want to read messages 228 through 250 and 292 through 295 in this folder. They cover many of the issues you are now facing, and may help you in some of your decisions.

Regards….Pixy


Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
UnThreaded | Threaded | Whole Thread (2) | Ignore Thread Prev Thread | Next Thread
Advertisement