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.
Any advice?
I’m wondering if you could take money out, after age 60, and avoid any income tax by using it pay off your mortgage or your HELOC....or say, invest in a small business ( like a old pickup with a snow plow)
This is the 2nd post of this nature today.
To me that is scary.
It tells me that there are many out there that have spent more time on sites like FR hashing over political things that other than voting they have no control over when they may want to spend time reading and boneing up on finance,investing,asset allocation and risk tolerance as they can control all of that.
Its not rocket science.
In the other post I recommended the poster go to the sites below and check out a few of the topics and see what others have too say.These are people that eat sleep and live $$$.
I suggest the same to you as I have seen a few foolish and uneducated replies.
http://socialize.morningstar.com/NewSocialize/forums/default.aspx
http://www.bogleheads.org/forum/index.php
Call Lear Capital and let them explain how this will help you (800-576-9355.) They've proven to be the best I've done business with over the years.
They will be doing my IRA shortly, as I'll be retiring within a few weeks. They do it all, and pretty fast too.
With a self administered account you can pay yourself monthly, or not, depending on your needs - and you can keep your 'income' low enough that you won't have to pay taxes on your distributions.
There is a high probability that gold will more than double in value in coming months, so what you have in your account will also double. Yes - it's all tied to the price of gold, but there is not much chance that it will radically fall in value - just the opposite.
Joe - a P.S. to my last. There is NO TAX involved in rolling your current IRA over into a gold IRA. You only pay taxes above a certain amount of distribution to yourself per year. If that value is below taxable rates of income, there is no tax.
You might want to look at a Roth conversion for your traditional IRA if you have a favorable tax rate right now.
"if Ubama decides to nationalize 401(k)s and IRAs, he can't get me."
He can't take away high numismatic value US Gold coins - at least as the law stands right now. Of course, he might try at some point, but he'll face the wrath and outrage of his own party hacks that have their wealth in high numismatic US gold coins. I doubt he'll risk that!
See posts 23, 24 and 26. Best advice I know of.
bump
Ask a Tax professional not anonymous internet folks.
Thanks
Take it out now. When the kenyan confiscates IRAs and 401Ks etc to replace them with some sort of “enhanced” social security, there will likely be no warning. On Tuesday your IRA is in its proper place. On Wednesday it has been replaced with a guaranteed number of government bonds that cannot be passed to heirs. You will get your new social security payments from the moment you retire until you die which will be a shorter span than you might think what with Obamacare being the inescapable law of the land now. With the cash from the IRA you could possibly fund a medical needs entity to pay for your costs in getting yourself offshore for necessary medical attention.
You might want to check out posts 23, 24, 26 too...
The best currency will always be gold. You can expect to see the one-world currency too in the not so distant future. Our dollars will be worthless, trade-in's will be devastating, but gold translates to more of the new 'cash.' Yeah, that too will go away at some point, with the 'mark' in the hand or the forehead, I suspect. But gold will always be 'money' at whatever paper or electronic representation.
Here is the bottom line...after reading all the comments, you should have come to the conclusion, no one knows what you should do.
There are too many variables and unknowns involved in this decision, for anyone to advise you. You’ve made many decisions over your life time based on the future. Now the future is very dark indeed, I believe darker than anytime in America’s history, and we are just at the beginning of it all.
At this point the best anyone can do IMO is...Trust Your Own Instincts.
Some things to consider:
1. ASSUMING you work full time making at least as much as you are making today, and ASSUMING you are not making over $250,000, then your INCOME tax will not likely increase. That’s as sure as anyone can be at this point in time given the “negotiations”.
2. Can you eliminate debt by cashing in? If so, will you save more in interest than you’ll pay in taxes?
3. Do you foresee any of these events that will let you cash in your IRA without paying taxes on it:
http://www.investopedia.com/articles/retirement/02/111202.asp#axzz2EEbDtrOq
I just took the plunge, with the 10% penalty. It was a pretty healthy IRA too. My problem is that there is NOTHING I would put my money in, short of fixed income, and that pays zero these days.
So yes, THE MAN gets a decent amount of money. Yes, also, he would likely have gotten a bit less when I retire. But I don’t live my life based on how much money THE MAN gets, I live it based on how much money I get and what I’m allowed to do with that money. In this case, I still get a decent amount of bucks and can use it to pay off my house. With the house paid off, I don’t have to itemize my 1040s anymore, and that makes tax time much, much, simpler.
An adviser would have told me that I was insane for doing this. The same adviser would have told me the same 6 years ago when I went fixed income, just before everyone else got to go through the collapse. It was OBVIOUS to me that Option-ARM Mortgages simply were not going to be paid back, there was no way, absolutely not way. But an adviser would have opened his textbook to Page 274 and pointed to me the sentence that says “mortgages are the safest investment possible, no need to ever worry about them”. So you get an idea of what I think of them.
My only mistake was not cashing out back then - as my bracket would have been lower (slightly lessening the take from THE MAN) and my return would have been higher - meaning that I would have had 6 years of not paying mortgage interest on my house (for that amount of money).
Advisers live in a static world - to them, nothing ever changes in our taxes or overall financial health - but I don’t. I live in Texas - if I lived in California, or retire in California (or any other state with an income tax), guess what: I get to pay state income tax on my 401k withdraws - probably not quite 10%, but close, in most cases. Now those states don’t get no access to that money (and they shouldn’t).
Another thing - I’m not as convinced as everyone else seems to be that we can live in this static world much longer. Our debt percentage is very close to that of Greece - maybe even higher now, and on a worse trajectory. We simply cannot maintain this trajectory - something will give. Either our taxes will go way, way, up, or the government will grab our retirement money and buy themselves close to another decade of free-wheeling spending. I don’t know the future - but I know it’s not static, something MUST give - just like it had to during the mortgage meltdown.
I would cash it out now. You cannot trust Obama, nor the GOP (they seem to be going along now).
I would be leery of doing any roll-overs....because Obama and the DNCGOP look like they will start going after IRA and 401K
Spend a little on a nice vacation....put some of it in regular savings (easy access)...some of it in long term investments (good mutual funds)...and stash some of it away in First Mattress and Bedspring in case all heck breaks loose
“He can’t take away high numismatic value US Gold coins - at least as the law stands right now.”
I doubt he bothers with that anyway. Most people that have real gold are looked at as Art Bell types, of which there are (relatively) few. This is not like the 1930s when people used gold coins daily (I think) and had currency back by gold (I think also). Today, to 99% of the country, the dollar is gold, and their is no reason to have that pain-in-the-neck metal around - same mindset that says “why stock up on stuff when Walmart and Sams are less than 10 miles away, and they’re always brimming?”.
Can Obama take Foreign Gold?
It depends on the amount you have in it. If you take out a large amount in a single year, the tax hit will be tremendous. But if you can survive by withdrawing only a small amount each year, you may actually have $0 taxes. Check with an accountant, or just play around in TurboTax with different scenarios.
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