What %age is the RMD at age 73?
Itās not just the tax differential and ability to manipulate RMDās to lessen marginal rates. If you have the ability to save extra money for retirement, you can shelter that excess from capital gains which can add up over time. Otherwise you will be paying capital gains on that unsheltered money every time you sell if it is in a regular investment account.
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Deleted. Wrong answer
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I believe it is about 3.77%.
(1/26.5)
Hereās an RMD calculator, if yāall want to play with the numbers:
We donāt know where tax rates may be headed. Right now, they are low. Thatās one reason to do Roth conversions now.
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Doing Roth instead of traditional IRA may or may not save taxes. Depends on situation and TBD future tax rates. The big reason to have at least some of the IRA funds in Roth is to give flexibility for pulling out money non-taxable down the road. For example, if you want to keep your income low in early retirement, to qualify for low rate ACA health care before age 65/Medicare. Or to avoid tax pain from RMDs if you have large 401k/IRA balances.
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I agree. For many people, the Roth is magical money, let the amount increase over time and never pay taxes on it. I think most people would see a situation where itās beneficial (at least in some years) to invest in a Roth. Put your money in one or roll over an IRA in years that your taxes arenāt that high, pull it out as desired many years down the road, tax free. We put in 20K many years ago, rolled it into a Roth when it was at 150K and paid the taxes on it (painful), and now itās worth 850K. When we need extra funds and donāt want to pay high taxes on our 401K withdrawals, we dip into it. Weāll be going on a trip of a lifetime with six people this summer, our treat, and weād have to pay 32% on additional 401K withdrawals if we accessed that. We can pull some money out and pay zero. Whatās not to love?
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Thank you! Fortunately DHs pension includes full health coverage with a low retiree contribution.
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For new folks here, also see this other shorter recent thread
https://talk.collegeconfidential.com/t/understanding-investments-stocks-cds-iras-and-such/
This is why you buy total stock market funds and sit tight.
Well sure, itās easy to say that youāll never pay taxes if you invest in funds that donāt give off dividends or capital gains, and never sell them. Eventually most people need their money.
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I agree with your premise. As you clearly understand, long bonds have two benefits if rates fall: 1)locking in current yields, and 2) capital appreciation.
CNBC had a guest on yesterday who was advising fixed income investors to lock in longer term bonds rates now, since rates are forecasted to decrease.
Rates ticked up today though.
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Yes on both counts. I just authorized a few purchases.
I also have an investment in a private credit fund, which has done very well in the current interest rate environment (and will continue to do so). But that does not lock in higher rates/capital appreciation so I may swap out some of that as well.
Thereās an error in the Schwab RMD calculator. For folks born in 1960 and later it continues to show RMD age as 73 (when it should be 75)
Hereās one that works:
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Good catch! Thanks!
Ta Daaā¦. taxes done and submitted. Hubby did most of the work (but I donāt feel sorry for him because in the decades before retirement it was mostly my chore). Both being children at heart, we celebrated by going out to Baskin Robbins for ice cream.
Bad news - we owed more than we paid in quarterly taxes, though hopefully close enough to make IRS happy. Good news - this was due to better than expected investment earnings, especially in 4th quarter (after we had hatched our quarterly payment plans).
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Hey, we were getting it done at the same time. I celebrated with a second glass of wine. Not thrilled with the result, but we were able to take a special deduction of 80% of our tractor, and all the business expenses that we hadnāt had the year prior, so Iām guessing that saved us about 20K in taxes. Iām tired!!
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I overlooked paying enough in to our state, and hope they donāt penalize, as we did have money there carry over from last year. With Turbo Tax submission, the request was for no penalty.
We are both turning 68 this year, and are transferring some funds from 401k into Roth IRA so that when we start having RMDs at age 73, we are sort of level in our taxes with RMDs. The reason for taxes due for 2023 was that I made a 2nd transfer of funds into Roth IRA not checking that I had already done so in the calendar year, and having had that awareness, would not have underpaid on the taxes.
One does need to keep the taxes in mind, and strategy on use of funds and how to go about it.
A toast to you and the others that are now āfinishedā with 2023 taxes, or are close to finishing.
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