Skip to comments.I am old enough to cash out my IRA. Should I do it now for tax purposes?
Posted on 12/05/2012 4:40:34 PM PST by Joe the Pimpernel
I turned 60 this year. I have a conventional and Roth IRA. The Roth obviously is tax free. I intend to work until the day I die, if God grants me the favor. Should I take the tax hit on the conventional IRA this year before the tax hikes kick in and cash it all out, or some of it?
Part of why I want to do this is so that if Ubama decides to nationalize 401(k)s and IRAs, he can't get me. The other is because taxes are going up.
I’d take it out. You know what taxes are now. If you can live with that, do it. Otherwise you’re basically gambling. I don’t see Obama and Co LOWERING taxes, do you?
I think you have two years before you need to worry about Obama nationalizing anything.
If the dems take the House, then all bets are off.
Dual citizenship is pretty attractive right now.
Ping me if you get some reasonable advice, my husband and I are asking the same questions.......really no one seems to know what to do.
I rolled into municipal bonds and so far, the results are good. The bonds are all Missouri cities but not the big metros.
PIMCO’s CEO said 1-2 percent return is going to be the rule for the next few years for stocks and mutual funds.
I think you can find some security in investments like bonds...
I can only tell you what I’ve done and why.
I have had two IRA’s in my career. I didn’t know I had them until I left the company. The IRA’s were tied heavily to the stock of the company and both were going down, hence my being laid off despite being a top performer.
I took the 20% hit and spent it. It was jackpot money as I didn’t invest them or I may have. I wouldn’t have consciously done that as I can do better with my money(My bloated ego)
If I had an IRA and knowing that in two years Obama, Boehner, et all will confiscate my loot and give me a coupon good for donuts and coffee, I’d take it out and take the hit.
Hell, if it’s enough maybe you buy some property, pay something down/off, invest it or put in a puny CD.
If you have a whole lot then you might consider bonds in other countries. They pay joker wild money but you need $100k to buy most of them.
Just be deliberate in your thinking and remind yourself in a few why you made the decision. That way you have no regrets but did your best.
do not give the tax man money. My mother waited until she was older ... her income went down and she had high medical expenses for long-term care.
She cashed out then, and the expenses offset the income ... therefore the tax was $0!
If fact, she did not cash out, she converted her traditional to a ROTH and paid the tax at that 0% rate.
my mother has her grandchildren as beneficiaries on the roth ira, so they will receive the tax-free benefits until they are 80 yrs old ... another 70 years!
keep your IRA’s ... many benefits.
Annuities are a different story.
I’ve been thinking about the same thing.
On the bad side: If you’re in a high bracket, and we go over the cliff, rates will go up about 5%.
On the good side: Even if you delay, the 3.8% Obamacare tax doesn’t apply to IRA distributions and conversions.
Also, you should remember that Roth IRAs may be tax-free, but there are still restrictions. Most of them apply to heirs. For you, the contributor, you have to wait 5 years before you can withdraw any gains without penalty. However, you can withdraw your original contribution if you need to.
I’m of the mind that the government will get increasingly greedy, and retirement plans are an obvious pot ‘o’ gold. So, I’m going to withdraw my IRA over the next few years, before I boost my base level income by taking SS.
YMMV, as they say.
If I was 59.5 at this very moment, I would cash out any IRA or 401K.
I am sitting right at 250K this year and file married jointly and I would take the hit.
Just my opinion. I have always been able to plan 5 years in advance concerning finances until around 2004 all my planning seemed to be for naught. This is probably the most confused I have ever been of what direction to “jump” with my finances.
The frog hairs on the back of my neck have been standing up as of late........could be a sign.....
svcw, see post #7.
another point, this confiscation idea ... the tax law would have to be changed by congress ... and the change would have to initiate in the HOUSE. Ain’t going nowhere.
The DEMS are agitating on this for the future ... when they takeover Congress, both houses like in 2009. When will that happen? 2025?
I would say get out of the dollar before you lose it all.
Do it in increments over the next 3-6 months.
I would say thats about how long we have left before hyper-inflation starts robbing everything from everybody.
Can you think of any scenario where the dollar will strengthen over the next 4 years?
Yeah... get out
A bird in the hand...
Here is what I did, cashed out, paid off debts. Set myself up to grow my own food (plus extra) and produce my own fuel (ethanol for the generators and cars plus extra). Also have the means of preserving the food and protecting the family from those that wish to take from me. Stocked up on canned goods for the family, water purification and extra medical supplies. All of this is to prep for any kind of disaster. Cost was just about $10,000. Also socked away some junk silver and some gold coins.
For that small amount, my family and I are set up to face even the worst of economic disasters and most natural disaster. I consider it “insurance” against society.
So if you can pay off your house, pay of cars, and other debts, get yourself where you “dont owe nobody, nothing”.
2. If it was me and I wanted to get out of stocks I'd looks to other investments you can hold in an IRA real estate and precious metals come to mind.
3. Don't take my advise or anyone else’s you get on a forum, its your money spend a few bucks and get advise from someone who invests for a living..
Same here. Hubby turns 60 soon.
Where could we put the money where it will be safe though and should we invest in gold? What currency will ever be safe in this world’s economy?
Leave your Roth money alone. If you plan to take the funds out of your traditional IRA and take the tax hit (hopefully you’ll be fortunate enough to be able to pay much, or all, of the taxes from sources other than your IRA distribution), have as much as you can rolled over to your Roth. Remember, with certain exceptions, you won’t be able to take the resulting earnings from that roll-over for 5 years but could take out any of the rolled over “principle” at any time without having to take a tax penalty.
Do some more research before you do anything hastily.
I would echo some other comments about not taking advice without detailed thought and planning, but if you want to consider strong foreign currencies, one you might look into is Swiss Francs. The Swiss have been around a very long time and seem better able to defend their country and its economy than many. Of course, you would be exposed to international currency fluctuations and foreign policy decisions.
Cash out now. The rats are already planning to steal our retirements!!!
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