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But perhaps, I should leave some TIRA money behind for funding long term care costs which I will most likely need at some point. Are there any special criteria that must be met in order to use TIRA dollars tax free for this purpose? I suppose there are.
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Well, as described, it's not completely "tax-free", to the extent that:
* You have to pick it up in gross income, so it's in your AGI for all purposes, including any applicable phaseouts.
* The offsetting LTC payments are a medical expense, subject to the 10% floor.
* If it makes your AGI high enough, you could be subject to the additional 3.8% Medicare tax on investment income

And all of the above were true in the case of my father, who had a lot of money (and a very good LTC insurance policy that you can't buy today) and who spent his last 9 years in a nursing home after suffering a stroke. He required additional personal nursing care, over and above that provided by the nursing home, which came to about $210,000 his last year.

My sisters all thought it was worth it. I had the health care and financial POA, and had the final vote, but they lived closer to him than I did. So I always deferred to their judgment.

Bill
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I am not a tax pro. Am I missing anything? Any unintended consequences to consider?

The kicker is what you mentioned. You have to be 70 1/2 for QCD. 63 doesn't cut it.
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Admittedly, I am not happy at possibly having to pay a higher tax bracket on funds that we put into IRAs with the expectation of being in a lower tax bracket in retirement.

Contributing to a traditional IRA comes with insurance against poor outcomes when compared to contributing to a Roth. If, in retirement, you end up with a small portfolio, a trad IRA gives you more money. The insurance is unusual in that you don’t pay for it upfront. You pay for it in the form of higher taxes on large RMDs. But it is insurance nonetheless and, I think, a good deal. I recommend my younger family members use a trad IRA because it’s such a good deal. You only pay for the insurance when you are rich enough to not need it. I’m not unhappy about paying for fire insurance and disability insurance and IRA insurance I didn’t need. But that doesn’t mean I don’t shop around for the best deals. I appreciate your posts about your shopping around to pay the least now that the insurance bill is due.
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The kicker is what you mentioned. You have to be 70 1/2 for QCD. 63 doesn't cut it.

Right, but we also don't have the tax burden until RMDs hit. Rather nice to be able to take action down the road in real time, rather than anticipate conversions in advance based on theoretical future returns.

IP
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...once you are over the age of 70.5.

Seems like a valid alternative to doing Roth Conversions, at least past 63.

That sounds like a long gap, depending on your age which I assume is greater than 63.

I have two age triggered events on the horizon. In 13 months I turn 70, and switch from SS survivor benefits to my own SS, which will be 32% higher than if I'd started it at FRA of 66. The second is reaching 70 1/2 when I qualify for QCDs. My investments have done well enough that I figure on spending some of it while I can, so I've stopped worrying about what my IRA withdrawals will do to my medicare payments. By the time I'm doing RMDs that will be a lost cause. I am still doing ROTH conversions as heavily as practical, and expect to keep that up at least through next year. (That is more for the benefit of my heirs than what it does for me.)

In the meanwhile I get to contemplate where I might make those contributions. Which reminds me I've been meaning to have lunch with someone I know who is the Executive Director of one of the organizations and give him something to help my 2021 deductions. 8-)
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Contributing to a traditional IRA comes with insurance against poor outcomes when compared to contributing to a Roth. If, in retirement, you end up with a small portfolio, a trad IRA gives you more money. The insurance is unusual in that you don’t pay for it upfront. You pay for it in the form of higher taxes on large RMDs. But it is insurance nonetheless and, I think, a good deal.

Interesting way of thinking about it, but assuming the same investments, a smaller Roth balance is only the case if you can't max out your Roth contribution without the tax savings the TIRA provides, though you could possible argue that your total accounts could be higher if you did not prepay your taxes. We have large TIRA balances because Roths were only around at the end of our career.

I recommend my younger family members use a trad IRA because it’s such a good deal. You only pay for the insurance when you are rich enough to not need it.

Similar to long term health care insurance, I prefer to self insure. We have urged our kids, for whom we started Roths at 14, to go 100% Roth, since they are now at the start of their careers and their tax bracket is likely to go up. I guess that could be mitigated if they get married. Eldest has done a great job with it, but this is Youngest's first year of putting the funds in himself. Not sure that's going to happen.

So many moving parts and not just one way of doing things.

IP
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That sounds like a long gap, depending on your age which I assume is greater than 63.

DH is 62. I am 58. It is a long gap and one of the concerns of not doing anything in the next 8 years is the possibility of QCDs going away and then having lost the tax effective opportunity to do conversions in these years. We are not taking SS until 70 and FRA, drawing off of taxable accounts in the meantime and paying conversion taxes from taxable accounts.

My investments have done well enough that I figure on spending some of it while I can, so I've stopped worrying about what my IRA withdrawals will do to my medicare payments. By the time I'm doing RMDs that will be a lost cause.

Yeah, I really have to look at this to see what sort of $$ we are talking about possibly saving. It may not be worth stopping the Roth Conversions. What can I say, I come from a frugal New England family. We are pretty content with our life with it's low cost activities and are not looking to spend money for the sake of spending money, but we are trying to take more luxuries. Even paid someone for a difficult installation of a thermostat complicated by our dual fuel heating system, rather than spend hours figuring out how to do it ourselves, and am trying to get DH to agree to having a lawn care company cut our lawn for us, which is real progress from the do everything yourself attitude we were raised with. Looking forward to extended travel when Covid gets less concerning and our sweet ageing dog has moved on. I have been in saving mode for almost 40 years. It's really hard to flip the switch to spending mode.

IP
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Contributing to a traditional IRA comes with insurance against poor outcomes when compared to contributing to a Roth. If, in retirement, you end up with a small portfolio, a trad IRA gives you more money. The insurance is unusual in that you don’t pay for it upfront. You pay for it in the form of higher taxes on large RMDs. But it is insurance nonetheless and, I think, a good deal. I recommend my younger family members use a trad IRA because it’s such a good deal. You only pay for the insurance when you are rich enough to not need it. I’m not unhappy about paying for fire insurance and disability insurance and IRA insurance I didn’t need. But that doesn’t mean I don’t shop around for the best deals. I appreciate your posts about your shopping around to pay the least now that the insurance bill is due. - spinning

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Disagree. You or your heirs are going to pay taxes on every penny in that TIRA unless you gift it all to charity. They will pay taxes on the present balance plus taxes on any return between now and distribution. If you convert to Roth, the taxes on that return are zero. Taxes avoided go right into yours or your heirs pockets.
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I am not a tax pro. Am I missing anything? Any unintended consequences to consider?

I retired last year at age 60. My wife (also retired) and I have most of our money in IRAs, and some in Roth IRAs.

Reasons that I have been converting a lot of IRA money to Roth:
-I want to fill up my 22% bracket, because I don't believe I'll be in a lower marginal bracket later
-I even am going into the 24% bracket, because I think that 24% will seem low later
-I want to avoid IRMAA later, so (like you) I will be cognizant of those limits at age 63
-Because I get only a very small pension, and my wife gets none, we have a low amount of money that's "automatically taxable." When we start taking social security, there's a lot of leeway in making our provisional income higher or lower depending on if we draw money for our needs from a regular IRA or a Roth. Using current numbers as estimates, we could save ~$5500 in taxes on the SS. That's if our marginal rate stays at 22%, so that savings is just by making our SS 50% taxable instead of 85%.

Yes, the rules could change, taxes could change, and you can't plan to the n'th degree. But, my "worst case" situation of converting now is "locking in" federal income taxes at 22% (a little at 24%). Either we'll save significantly on social security taxes, or we won't if rules change drastically. But, there's no large downside, that is, I won't be kicking myself in six or eight years because my taxes are somehow zero and I already did the Roth conversions at 22%. Notice that I haven't even touched on RMDs yet...it still seems that my conversion process with either be a benefit or neutral as far as RMDs, but won't turn out to have been a bad decision. Well, unless I get such fantastic returns that I wish I'd converted even more, but like you said, that's really a first world problem.

A lot of advice about Roth conversions makes some bad assumptions or at least incomplete ones. That is, they assume you can pay the taxes out of current income and that's the end of that line of thought. But, if you have money to pay the conversion taxes but don't convert, you'd have that money to invest. So, you need to be careful to model an accurate A vs B comparison.

I've been changing the Roth-to-IRA allocation so that the Roths are mostly broad index funds, while the bonds are in the regular IRAs along with funds that don't reflect broad indexes (Health Care, Consumer Staples, REITs). That way, if stocks are down vs. bonds, the Roth money is actually my "longer term" money than the regular IRA (at least for the next >six years). Also, if the non-indexes underperform, the eventual tax bill will be lower; if they outperform, I'll gladly share some of that outperformance with Uncle Sam.
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But, my "worst case" situation of converting now is "locking in" federal income taxes at 22% (a little at 24%).

Keep in mind that, unless the laws are changed again, starting in 2026 the tax rates revert.
- 12% tax rate goes back up to 15%
- 22% tax rate goes back up to 25%
- 24% tax rate goes back up to 28%
- 32% tax rate goes back up to 33%
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Am I missing anything? Any unintended consequences to consider?

- Be sure the IRA owner is actually 70.5 before making the contribution. It doesn't count as a QCD if the owner is over 70, but not yet 70.5, even if it's in the year that they turn 70.5
- Watch for changes in tax law, as they may adjust QCD age up
- At this point, QCDs are not indexed to inflation and are limited to the $100k, so in 10 or 15 years, who knows how much of your RMD that will use up

AJ
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Disagree. You or your heirs are going to pay taxes on every penny in that TIRA unless you gift it all to charity.

Not necessarily. For those who are self-funding long term care costs, there are often no taxes paid on Traditional withdrawals. And in any case, you need to consider what the tax rate will be, compared to the tax rates that you saved when you made contributions. Personally, most of my contributions saved taxes at 28% or higher, and all saved at least 25%. So currently only paying taxes at 22% or 24% on Traditional withdrawals is actually a savings, and even when rates go back up as scheduled, it will pretty much be a wash. And it's quite possible that if I need long term care, I will be paying no taxes, as already mentioned.

AJ
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Not necessarily. For those who are self-funding long term care costs, there are often no taxes paid on Traditional withdrawals.

</snip>


Absolutely!

Since LTC expenses are tax-deductible, the best place to fund that is with a traditional IRA withdrawal. You get less "bang for the buck" funding LTC by selling stock in a taxable account, or God forbid, with a Roth IRA withdrawal.

Thus, don't go hog wild trying to reduce your traditional IRA to zero. Keep some traditional IRA powder dry for LTC, unless you're opting for euthanasia as an alternative.

intercst
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-I want to fill up my 22% bracket, because I don't believe I'll be in a lower marginal bracket later
-I even am going into the 24% bracket, because I think that 24% will seem low later


So although we already hashed much of this out on a previous thread, I will continue to comment on it here, in part because it is so thrilling to hear from someone in the same position and thinking the same way. Sure, confirmation bias. What else is the internet for? </sarcasm>

Given that the tax brackets revert to 2017 levels in 2025 if nothing is done by then, and the 24% bracket is gloriously large right now, we are converting up through the 24% bracket. One of our kids is already in the 35% tax bracket so any taxable funds used to pre-pay income tax on inherited funds are a good deal.

But, there's no large downside, that is, I won't be kicking myself in six or eight years because my taxes are somehow zero and I already did the Roth conversions at 22%.

Yes! Thank you. Except maybe for Medicare costs. Just haven't looked at that yet.

Because I get only a very small pension, and my wife gets none, we have a low amount of money that's "automatically taxable." When we start taking social security, there's a lot of leeway in making our provisional income higher or lower depending on if we draw money for our needs from a regular IRA or a Roth.

We lump summed cashed in all of our pensions this year, being in petroleum refining, an industry under threat with Covid. We were concerned about more than one of our companies surviving, concerned about having to fight for our pensions via Federal Pension Insurance. This taking of the lump sum increased our TIRAs, but lowered the amount of taxable income starting at 65 and deferring it to 72. Controlling amount of taxable RMDs by Roth Conversions is about the only controllable impact we can have on our taxable income. Another possible area is rental income, though at this point in time depreciation helps us greatly there.

I've been changing the Roth-to-IRA allocation so that the Roths are mostly broad index funds, while the bonds are in the regular IRAs along with funds that don't reflect broad indexes (Health Care, Consumer Staples, REITs). That way, if stocks are down vs. bonds, the Roth money is actually my "longer term" money than the regular IRA (at least for the next >six years).

We don't hold bonds, (other than I-bonds that we bought 20 years ago as emergency fund/college fund that we never tapped for college,) but hold bond "alternatives." These include rental real estate and dividend paying stocks and ETFs. We hold the real estate in taxable positions.

FWIW,

IP
appreciating your input
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For those who are self-funding long term care costs, there are often no taxes paid on Traditional withdrawals.

Love it. Of course, I very much hope not to be paying long term care costs at 72, so there will hopefully be years, decades even, where the RMDs on Traditional IRAs are taxed.

IP,
eternal 18 year old in her mind
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Keep some traditional IRA powder dry for LTC, unless you're opting for euthanasia as an alternative.

Are the Dollar Trees near you all out of helium?
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Not necessarily. For those who are self-funding long term care costs, there are often no taxes paid on Traditional withdrawals. - aj

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That's interesting. For a long time now I have been aggressively converting my TIRA to a Roth. I had hopes to eliminate my TIRA entirely by the time I started taking SS at age 70 but fell short due to those pesky market returns. At this point, with my estimated conversion headroom, I will need another 4 or 5 years.

But perhaps, I should leave some TIRA money behind for funding long term care costs which I will most likely need at some point. Are there any special criteria that must be met in order to use TIRA dollars tax free for this purpose. I suppose there are.
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Absolutely!

Since LTC expenses are tax-deductible, the best place to fund that is with a traditional IRA withdrawal. You get less "bang for the buck" funding LTC by selling stock in a taxable account, or God forbid, with a Roth IRA withdrawal.

Thus, don't go hog wild trying to reduce your traditional IRA to zero. Keep some traditional IRA powder dry for LTC, unless you're opting for euthanasia as an alternative.

intercst


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AJ - This answers my question. It has been so long since I have itemized I had forgotten all about the simple medical deduction.
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inparadise writes: On the tax strategies board they were discussing tax deductions for charitable gifts. This caught my eye:

"In addition, you can use a Qualified Charitable Contribution (QCD) to donate as much as $100,000 to qualified charitable organizations each year once you are over the age of 70.5. The IRA custodian transfers the contribution directly from your IRA to the charity. The QCD is a non-taxable distribution from your IRA."

I am sure this is not news to many of you, but while I had heard the term before I never had my AHA moment. I am not a tax pro. Am I missing anything? Any unintended consequences to consider?...hoping this can trigger thoughtful discussion and not personal attacks

I seem to recall a previous poster who mentioned in another thread to you...

If it is too much of a burden to your children and to you - pass it off to charity so neither you or your children have to worry so much. There are plenty of charities that would more than welcome, and could use the gift.

BB
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I've been changing the Roth-to-IRA allocation so that the Roths are mostly broad index funds, while the bonds are in the regular IRAs along with funds that don't reflect broad indexes (Health Care, Consumer Staples, REITs). That way, if stocks are down vs. bonds, the Roth money is actually my "longer term" money than the regular IRA (at least for the next >six years).

We don't hold bonds, (other than I-bonds that we bought 20 years ago as emergency fund/college fund that we never tapped for college,) but hold bond "alternatives." These include rental real estate and dividend paying stocks and ETFs. We hold the real estate in taxable positions.


The money I have for the next ~three years of spending needs is not in stocks; it's in cash/bonds. This is just a risk mitigation. That is, I'm accepting a lower expected gain in exchange for a much narrower range of outcomes.
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Well said IP


...If that's not your gig, simply press ignore thread now.

...hoping this can trigger thoughtful discussion and not personal attacks


nag
still waiting for that Thick skin, it's been delayed yet again
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Take back the boards!
On topic, civil and with content (different views) that many can benefit from.

Well
Except for PA - they have their own (non) rules.

nag
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I seem to recall a previous poster who mentioned in another thread to you...

If it is too much of a burden to your children and to you - pass it off to charity so neither you or your children have to worry so much. There are plenty of charities that would more than welcome, and could use the gift.

BB


Isn't it miraculous how much better the message is received when presented in an informative way, such as was done on the Tax Strategy Board, as opposed to the aggressive message above.

Additionally, the understanding that we could target up to $100K of the RMD and make it tax free via annual contributions is much easier to deal with (for my brain) than the struggle of figuring out now what could be a viable healthy organization when we pass on in hopefully decades, or given we still have one kid who is struggling to find his way, knowing how much to allocate in our will to charity. Too many moving parts.

Who knows how much of our assets will get chewed up by healthcare costs. I have no clue how to allocate money to charity in a will, when I don't know how much I will have or what our kids' needs will be. Smaller amounts, evaluated annually, is so much easier to my brain. Bigger bonus is including the kids' wishes and having family discussions about where to give. YMMV

Part of the beauty of the QCDs is that I can do it while taking RMDs...in fact I have to do so.
It postpones decision making to a time where a better picture of finances is available. Or it's a back up plan in the event that the Conversions we do are not enough. Nice to be able to give while still living and lower taxes, even nicer to do so in a controlled annual manner that can be re-evaluated annually.

IP
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Hi CuriousQ
Appreciate the point you make, but I'm just being curious. The condition you describe yourself in is, in my working years experience, quite common. Retiring at 59 to 64, which is early for most. No pension and no social security usually puts such a couple deep in the 12%, if not the 10% bracket, not the 22% bracket. Of course, there could be other sources of income such as installment sales, rentals, Inherited IRAs, etc. But for most, this is the ideal time to do large RIRA conversions.

Example:

Retired couple age 62 with one $30,000 pension and $5,000 in qualified dividends and long term capital gains (QD+LTCG). No other income subject to taxation with Social Security not planned until age 67. Ordinary income of $30,000 - $25,100 standard deduction = $4,900 of taxable ordinary income plus stacked on top of this, $5,000 QD+LTCG = $9,900 taxable income. The top of the 12% bracket for 2021 is $81,050, which leaves $71,150 of 12% 'Headroom', of which leaves $66,150 of ordinary income taxed at 12% with a Roth conversion and the $5,000 of QD+LTCG. That would be a sizable Roth conversion for most, particularly if done year after year up to first Social Security year. And the $5,000 of QD+LTCG stacked on top would be taxed at 0%.

Pushing this up to the top of the 22% bracket for married filing jointly, and the numbers start getting big....for most retired households (certainly not to Jeff Bezos)

Top of 12% bracket: $81,050
Top of 22% bracket: $$172,750

Total ordinary income at 22%: $172,750 - $81,050 = $91,700. Add this to the Roth conversion amount at 12% of $75,150 = $166,850, pushing the $5,000 QD+LTCG up but still taxed at 15%. That's a lot of Roth conversion for most, but it certainly can make sense if your employer plan rollover is well up into the 6 or even 7 digits and/or you expect a large jump in household income in the next few years.

A couple of other comments.
Social Security and Medicare taxes (FICA) are taxed on earned income, not un-earned income such as the ordinary income from a TIRA to RIRA conversion.

As to the financial benefit/penalty of using conversion dollars to pay the tax (have the IRA custodian withold x% and send to the IRS) vs using money from a taxable account, I'd encourage you to take a look at my friend Financial Dave's articles on this at Seeking Alpha. IMHO, it doesn't matter that much...but that's me.

https://seekingalpha.com/author/financialdave#regular_articl...

BruceM
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Top of 12% bracket: $81,050
Top of 22% bracket: $$172,750

Total ordinary income at 22%: $172,750 - $81,050 = $91,700. Add this to the Roth conversion amount at 12% of $75,150 = $166,850, pushing the $5,000 QD+LTCG up but still taxed at 15%. That's a lot of Roth conversion for most, but it certainly can make sense if your employer plan rollover is well up into the 6 or even 7 digits and/or you expect a large jump in household income in the next few years.

A couple of other comments.
Social Security and Medicare taxes (FICA) are taxed on earned income, not un-earned income such as the ordinary income from a TIRA to RIRA conversion.



If I understand correctly, one question you have is "Why do [I] feel [I'm] automatically in the 22% marginal bracket rather than the 12% bracket?" Part of that is that I still have some "working life" hangover. That is, When I retired in 2020, I was still paying taxes on earned income, plus Social Security and Medicare taxes, plus I had a kid in college and another at home finishing off her college loans. So, there were a lot of expenses I didn't have in 2021 but I was still in a working/parent mentality. Also, in 2021, I had my health insurance go up *A LOT* because it went from paying a portion as employee to it being all on me. (And note--as an employee, the part I paid came out before taxes; once I paid 4x that on my own, it came from after-tax money.) I'll revisit my numbers once I complete my 2021 taxes next year.

On the topic of income subject to Social Security and Medicare taxes, I understand that the unearned income from IRA withdrawals or Roth conversions aren't subject to that. I was talking about how one's taxable income can cause his/her Social Security to be taxed at 0%, 50% or 85%. It looks like I will be in the situation where I will be at a mix of 50% and 85% if I get some of my income needs from a taxable IRA withdrawal, but all 50% if I get most of my income needs from a Roth IRA. So, the trade-off is: Pay 22% tax on a Roth conversion now and pay little taxes on SS later, or pay no tax on a Roth conversion now by not doing one, and pay 22% tax on an IRA withdrawal later along with 85% taxes on SS. The Medicare surcharge I mentioned was the one that you get hit with if your taxable income is >$182K.

I read Financial Dave's article on conversions, and there wasn't anything new there for me. Actually, your prompt to question my assumption of perpetually being in the 22% bracket was the most useful. We also want to remember that (unless something changes), the 12% tax rate goes to 15% and the 22% tax rate goes to 25% in 2026.
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When I retired in 2020, I was still paying taxes on earned income, plus Social Security and Medicare taxes

You will certainly pay FICA on income earned in 2020, but once retired, you should discontinue FICA tax unless you received deferred comp distributions under Sec. 409(A) contributions made in the past by your employer, as those have not yet been subject to FICA tax. But earned inccome in 2020 could certainly keep you in the 22% bracket for that year.

If you and spouse have no earned income in 2021 and you aren't yet 65, with no SS or pension, you should qualify for a fully ACA subsidy....correct?

A small accuracy point. SS income isn't taxed at 50%, its a question of what percent (or how much in dollars) of the household Social Security must be included as ordinary income, which depending on your modified AGI, will be between 0% and 85%. Whether any or all of that is subject to tax depends on what the rest of your tax return looks like. I suspect this is what you meant. But with no other source of income than Roth conversions or perhaps TIRA withdrawals, as long as 1/2 of household (your and spouse) social security + other household income (including any muni bond interest) is under $32,000, none of your SS will have to included as income. If less thann $44,000, between 0% and 50% must be included as income.

Yes, your observation of the reversion to pre-TCJA brackets in 2026 is right. However, Congress has a history of going somewhere else for revenue rather than raising existing rates, as 'raising' tax rates usually doesn't go over very well politically. But we'll have to wait and see.

BruceM
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But perhaps, I should leave some TIRA money behind for funding long term care costs which I will most likely need at some point. Are there any special criteria that must be met in order to use TIRA dollars tax free for this purpose? I suppose there are.
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Well, as described, it's not completely "tax-free", to the extent that:
* You have to pick it up in gross income, so it's in your AGI for all purposes, including any applicable phaseouts.
* The offsetting LTC payments are a medical expense, subject to the 10% floor.
* If it makes your AGI high enough, you could be subject to the additional 3.8% Medicare tax on investment income

And all of the above were true in the case of my father, who had a lot of money (and a very good LTC insurance policy that you can't buy today) and who spent his last 9 years in a nursing home after suffering a stroke. He required additional personal nursing care, over and above that provided by the nursing home, which came to about $210,000 his last year.

My sisters all thought it was worth it. I had the health care and financial POA, and had the final vote, but they lived closer to him than I did. So I always deferred to their judgment.

Bill
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When I retired in 2020, I was still paying taxes on earned income, plus Social Security and Medicare taxes

You will certainly pay FICA on income earned in 2020, but once retired, you should discontinue FICA tax unless you received deferred comp distributions under Sec. 409(A) contributions made in the past by your employer, as those have not yet been subject to FICA tax. But earned inccome in 2020 could certainly keep you in the 22% bracket for that year.


That's true about 2020, but the point I was trying to make was that I still was in the mindset of needing enough income to cover those expenses, which I would not need for unearned income going forward.

The part that's not as simple for 2021, is that severance *is* subject to SS and Medicare taxes. I got some severance monthly from late 2020 through part of 2021. Thanks to having kids graduate from college and go off our expenses, plus having a couple family medical situations that made us hit the out-of-pocket maximum for two years, it's been difficult to estimate our true minimum income needed. We may be closer to the 22%/12% line than I assumed.

The gist of my post was that by converting IRA money to Roth prior to taking SS can save taxes on that social security. Plus, if you're in the same tax bracket before and after, it could be a nice upside with no downside, but you need to model it to see if it applies.
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The gist of my post was that by converting IRA money to Roth prior to taking SS can save taxes on that social security. Plus, if you're in the same tax bracket before and after, it could be a nice upside with no downside, but you need to model it to see if it applies.

Running your numbers, challenging your assumptions and making an informed decision are always a good idea. We had always assumed we would be in a lower tax bracket in retirement and were stunned to see that was unlikely to be the case. Small regular contributions into investments over a long period of time is a powerful tool towards future income. I always knew that theoretically, but it is impressive how strong a tool it is.

IP,
again urging everyone to run their numbers and be aware
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but you need to model it to see if it applies.

Yes Indeed!

This is why true financial planning is difficult. Lots of moving parts that must be taken into account and no two households are the same. Software as a planning tool has made this easier to do, but it is still only a tool. A good planner still has to flow out household cash flow needs over future years, making certain assumptions. Your situation is complex, but it is plannable.

Best wishes.

BruceM
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Lots of moving parts that must be taken into account and no two households are the same. - BruceCM

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That is why I use Excel for my planning. I can make it as detailed and as specific to my circumstances as I want to. I have added and fined tuned my model over the years not only update with current asset values as the starting point but to update assumptions about future inflation factors, investment returns, allowances for contingencies, spending and timing of optional items, and so forth.

My spreadsheet currently has 113 rows in it to calculate and summarize all the various elements of costs, income, investment returns, as well as movement of funds between investment accounts.

It has thirty-one yearly columns, one for current year starting values and then projections for each of the next thirty years. When I still have a high investment balance in year 30, when I will 100 years old, then I feel pretty comfortable. I would never trust an online retirement calculator to capture all the nuances that I feel are important for me to have confidence in the result.
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