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#1
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OT How much IRA to take out?
Anyone know of a rough way to figure out what is the right amount of
money to take out of retirement without paying too much tax that year? My income will be the same this year is it was the last, but I want to withdraw some of my retirement. How do you figure out what percent tax you will have to pay? If you can recommend an "active" group where this would be on topic I would appreciate it. |
#2
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OT How much IRA to take out?
On Tue, 25 Oct 2011 20:37:01 -0400, Metspitzer
wrote: Anyone know of a rough way to figure out what is the right amount of money to take out of retirement without paying too much tax that year? My income will be the same this year is it was the last, but I want to withdraw some of my retirement. How do you figure out what percent tax you will have to pay? If you can recommend an "active" group where this would be on topic I would appreciate it. Um, consult your Human Resource Office and tax preparation person? Taking money is a bad idea: - Penalty for early withdrawal - Taxed again as income for the year? - Possible state taxes on income the same year. I would advice against it. Just my option. Contact your HR Manager. |
#3
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OT How much IRA to take out?
On Oct 25, 8:37*pm, Metspitzer wrote:
Anyone know of a rough way to figure out what is the right amount of money to take out of retirement without paying too much tax that year? My income will be the same this year is it was the last, but I want to withdraw some of my retirement. *How do you figure out what percent tax you will have to pay? If you can recommend an "active" group where this would be on topic I would appreciate it. If you are 70 and 1/2 there is a minimum distribution of about 4%. Since you pay income tax on it, what ever it adds to your total will be taxed at that maximum. Same for anything you take out but there are penalties for early withdrawal. Most I know, myself included, take the minimum distribution. |
#4
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OT How much IRA to take out?
On Tue, 25 Oct 2011 17:54:42 -0700 (PDT), Frank
wrote: On Oct 25, 8:37*pm, Metspitzer wrote: Anyone know of a rough way to figure out what is the right amount of money to take out of retirement without paying too much tax that year? My income will be the same this year is it was the last, but I want to withdraw some of my retirement. *How do you figure out what percent tax you will have to pay? If you can recommend an "active" group where this would be on topic I would appreciate it. If you are 70 and 1/2 there is a minimum distribution of about 4%. Since you pay income tax on it, what ever it adds to your total will be taxed at that maximum. Same for anything you take out but there are penalties for early withdrawal. Most I know, myself included, take the minimum distribution. I forgot to mention I am 52/disabled so there is no penalty to take it out. I called it an IRA. It is actually a Vanguard mutual fund. |
#5
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OT How much IRA to take out?
On 10/25/2011 7:37 PM, Metspitzer wrote:
Anyone know of a rough way to figure out what is the right amount of money to take out of retirement without paying too much tax that year? Depends on what the definition of "too much" is? My income will be the same this year is it was the last, but I want to withdraw some of my retirement. How do you figure out what percent tax you will have to pay? It's pretty simple to estimate if your deductions are also similar to last year's your marginal rate will begin at the point were in last year. Question is where you are wrt the breakpoints which are obtainable from tax tables at the irs site. If you're subject to AMT or other special circumstances it's more complex, obviously. If you can recommend an "active" group where this would be on topic I would appreciate it. misc.taxes.moderated -- |
#6
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OT How much IRA to take out?
On 10/25/2011 8:40 PM, Metspitzer wrote:
.... I forgot to mention I am 52/disabled so there is no penalty to take it out. I called it an IRA. It is actually a Vanguard mutual fund. Well, those two aren't exclusive; you could hold mutual fund shares in an IRA. If it is a traditional IRA, the income is taxed as ordinary income; if it were a Roth IRA it would not be taxable, if it is _not_ an IRA at all, then it would be either short- or long-term capital gains depending on how long the sold shares have been held. Anything approximating a real answer will depend on the actual answers. I would recommend (again) misc.taxes.moderated but figure out and provide the correct information before posting the question. -- |
#7
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OT How much IRA to take out?
On 10/25/2011 7:54 PM, Oren wrote:
.... Taking money is a bad idea: - Penalty for early withdrawal Agree there, but there are circumstances in which can avoid the early withdrawal penalty even if under 59=1/2 (which OP later indicates is but meets one of them). - Taxed again as income for the year? If traditional IRA, yes; Roth, no. - Possible state taxes on income the same year. I would advice against it. Just my option. .... Would note that depending on circumstances (size of the IRA being a significant one), it's possible that if wait the size of a required RMD might drive the taxpayer into even higher marginal tax bracket than would be if were to maximize the margin between existing bracket and the next higher one (assuming under the maximum, obviously). In that case it makes sense to take out at least that amount after 59-1/2 but yet before 70-1/2. Also, it depends on what one's expected income is going to be going forward outside of the IRA withdrawals and what one uses as estimates (guesses) of future marginal tax rates. One can make at least reasonable presumptions that there's a good likelihood those may be going up. Does one want to gamble on that not happening or not is the question--the devil you know vs the one in the future you don't. -- |
#8
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OT How much IRA to take out?
On 10/25/11 8:37 PM, Metspitzer wrote:
Anyone know of a rough way to figure out what is the right amount of money to take out of retirement without paying too much tax that year? My income will be the same this year is it was the last, but I want to withdraw some of my retirement. How do you figure out what percent tax you will have to pay? If you can recommend an "active" group where this would be on topic I would appreciate it. This concept for IRA withdrawals is called "topping up the bracket". It's basically fairly simple to figure. Look at your 2010 tax return at the line for TAXABLE INCOME (Line 27 on 1040A). Then look at the bracket ranges (ie $0-$8375 = 10% for Single filers) The difference between Line 27, and the $8375 (in this example) is how much room you have left to stay in the 10% bracket (again this an example). Your Taxable Income, equivalent Bracket, and File Status may vary. This also assumes you are the correct age, etc to not having an "early withdrawal" penalties, etc. Also IIRC, you must make the withdrawal before DEC 31 to apply to that years return. So you need to do a rough "what-if" return before the end of the year to get a good idea of how much you can "top up the bracket. in addition to NG misc.taxes.moderated the forum at http://www.city-data.com/forum/retirement/ has good discussions I have been doing this since age 59.5, now 67. BTW, is your Vanguard MF account specifically a Traditional or Rollover IRA account ?? If it's a Roth IRA, or a non-IRA account, then none of this applies. |
#9
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OT How much IRA to take out?
On Tue, 25 Oct 2011 20:37:01 -0400, Metspitzer
wrote: Anyone know of a rough way to figure out what is the right amount of money to take out of retirement without paying too much tax that year? My income will be the same this year is it was the last, but I want to withdraw some of my retirement. How do you figure out what percent tax you will have to pay? If you can recommend an "active" group where this would be on topic I would appreciate it. misc.taxes.moderated Thanks everyone |
#10
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OT How much IRA to take out?
On 10/25/2011 9:40 PM, Metspitzer wrote:
On Tue, 25 Oct 2011 17:54:42 -0700 (PDT), Frank wrote: On Oct 25, 8:37 pm, wrote: Anyone know of a rough way to figure out what is the right amount of money to take out of retirement without paying too much tax that year? My income will be the same this year is it was the last, but I want to withdraw some of my retirement. How do you figure out what percent tax you will have to pay? If you can recommend an "active" group where this would be on topic I would appreciate it. If you are 70 and 1/2 there is a minimum distribution of about 4%. Since you pay income tax on it, what ever it adds to your total will be taxed at that maximum. Same for anything you take out but there are penalties for early withdrawal. Most I know, myself included, take the minimum distribution. I forgot to mention I am 52/disabled so there is no penalty to take it out. I called it an IRA. It is actually a Vanguard mutual fund. Personally, if I did not need the money, I would leave it alone and let it compound tax free. Don't know how your mutual fund is doing but think you can rotate it without penalty. I did not take any withdrawals from IRA's or 401k until it was mandated and since I still have work income can buy Roth's. |
#11
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OT How much IRA to take out?
In article ,
Metspitzer wrote: I forgot to mention I am 52/disabled so there is no penalty to take it out. I called it an IRA. It is actually a Vanguard mutual fund. It is a Vanguard mutual fund within an IRA. This alone tells me that you don't quite understand how the thing works and you should probably get a CPA or your HR dude involved to help walk you through it. The IRA withdrawals are complicated. -- People thought cybersex was a safe alternative, until patients started presenting with sexually acquired carpal tunnel syndrome.-Howard Berkowitz |
#12
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OT How much IRA to take out?
I would
1) call your accountant 2) call the fund manager, where you have your funds 3) look for the information on a .gov website 3a) print out the website, and date your printout, because the gov likes to change the rules when they good and feel like it. -- Christopher A. Young Learn more about Jesus www.lds.org .. "Metspitzer" wrote in message ... Anyone know of a rough way to figure out what is the right amount of money to take out of retirement without paying too much tax that year? My income will be the same this year is it was the last, but I want to withdraw some of my retirement. How do you figure out what percent tax you will have to pay? If you can recommend an "active" group where this would be on topic I would appreciate it. |
#13
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OT How much IRA to take out?
On Oct 26, 7:44*am, Frank wrote:
On 10/25/2011 9:40 PM, Metspitzer wrote: On Tue, 25 Oct 2011 17:54:42 -0700 (PDT), Frank *wrote: On Oct 25, 8:37 pm, *wrote: Anyone know of a rough way to figure out what is the right amount of money to take out of retirement without paying too much tax that year? My income will be the same this year is it was the last, but I want to withdraw some of my retirement. *How do you figure out what percent tax you will have to pay? If you can recommend an "active" group where this would be on topic I would appreciate it. If you are 70 and 1/2 there is a minimum distribution of about 4%. Since you pay income tax on it, what ever it adds to your total will be taxed at that maximum. *Same for anything you take out but there are penalties for early withdrawal. *Most I know, myself included, take the minimum distribution. I forgot to mention I am 52/disabled so there is no penalty to take it out. *I called it an IRA. *It is actually a Vanguard mutual fund. .... Personally, if I did not need the money, I would leave it alone and let it compound tax free. *Don't know how your mutual fund is doing but think you can rotate it without penalty. What do you mean by "rotate it"? Do you mean "exchange it" - same Mutual Fund family, different Mutual Fund? Do you mean "switch it" - Different Mutual Fund family, which requires a liquidation and a purchase? What do you mean by "without penalty"? There may not be any IRS related penalties to exchange and/or switch funds, but depending on the share class, holding period and account rules, there may be "penalties" related to fund changes within the account itself. I did not take any withdrawals from IRA's or 401k until it was mandated and since I still have work income can buy Roth's. You don't "buy Roth's". You can open a Roth IRA, you can contribute to a Roth IRA, you can convert a Traditional IRA to a Roth IRA and you can recharacterize a Roth IRA back to a Traditional IRA, but a Roth IRA is not something you "buy". |
#14
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OT How much IRA to take out?
On Oct 26, 8:02*am, "Stormin Mormon"
wrote: I would 1) call your accountant 2) call the fund manager, where you have your funds 3) look for the information on a .gov website 3a) print out the website, and date your printout, because the gov likes to change the rules when they good and feel like it. -- Christopher A. Young Learn more about Jesus *www.lds.org . "Metspitzer" wrote in message ... Anyone know of a rough way to figure out what is the right amount of money to take out of retirement without paying too much tax that year? My income will be the same this year is it was the last, but I want to withdraw some of my retirement. *How do you figure out what percent tax you will have to pay? If you can recommend an "active" group where this would be on topic I would appreciate it. 2) call the fund manager, where you have your funds I doubt you can talk to the "fund manager" - the person or persons that make the investment decisions within the portfolio. Even if you could, he/she/they are not going to discuss the tax implications of withdrawing money from an IRA. Perhaps you meant to say: 2) call the custodian of your IRA |
#15
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OT How much IRA to take out?
On 10/26/2011 1:04 PM, DerbyDad03 wrote:
.... 2) call the fund manager, where you have your funds I doubt you can talk to the "fund manager" - the person or persons that make the investment decisions within the portfolio. Even if you could, he/she/they are not going to discuss the tax implications of withdrawing money from an IRA. Perhaps you meant to say: 2) call the custodian of your IRA And they can tell them the process by which they can withdraw funds and whether they are qualified or not, but they won't provide individual investor tax advice, either--in fact, they will say the same thing--"talk to your own advisor for tax advice". Realistically they can't say anything else even if they wanted to; they don't know enough of any client's overall situation to be able to make a considered response just as none of us here can make any actual recommendation; all can try to do is to point out considerations for OP to keep in mind as goes forward. The most reliable one of which is that advice is generally worth at least as little as you pay, and often significantly less. -- |
#16
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OT How much IRA to take out?
On Oct 26, 3:26*pm, dpb wrote:
On 10/26/2011 1:04 PM, DerbyDad03 wrote: ... 2) call the fund manager, where you have your funds I doubt you can talk to the "fund manager" - the person or persons that make the investment decisions within the portfolio. Even if you could, he/she/they are not going to discuss the tax implications of withdrawing money from an IRA. Perhaps you meant to say: 2) call the custodian of your IRA And they can tell them the process by which they can withdraw funds and whether they are qualified or not, but they won't provide individual investor tax advice, either--in fact, they will say the same thing--"talk to your own advisor for tax advice". ... Realistically they can't say anything else even if they wanted to; they don't know enough of any client's overall situation to be able to make a considered response Very often, the "custodian of the IRA" and the "advisor" are pretty much (or can be) the same entity. Let's say the custodian of my IRA is a wirehouse known as BFIF (Big Friggin' Investment Firm). Let's say the Financial Advisor works for BFFF. In most cases, both the name of the firm (the Custodian) and the name of the Advisor is going to be on the client's statement. If the client calls the Custodian and gives them the account number, they should be able to connect them with the Financial Advisor responsible for the account. That Financial Advisor should already know about the client's overall situation or should at least be able to ask the correct questions in order to offer advice, assuming he is following the FINRA Know Your Client rules. Now, granted, there are many cases where the client has opened an IRA directly with a Mutual Fund company (your Vanguards, Fidelities, et al) and may have opted not to pay for "advice" and may indeed not have anyone legally able to give him advice. All that said, my response to the suggestion that he "call the fund manager" still stands. There is *no* way the client is going get any advice from the "fund manager" - the person or persons that make the investment decisions within the portfolio. just as none of us here can make any actual recommendation; all can try to do is to point out considerations for OP to keep in mind as goes forward. *The most reliable one of which is that advice is generally worth at least as little as you pay, and often significantly less. * -- |
#17
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OT How much IRA to take out?
On 10/26/2011 2:50 PM, DerbyDad03 wrote:
.... Very often, the "custodian of the IRA" and the "advisor" are pretty much (or can be) the same entity. Let's say the custodian of my IRA is a wirehouse known as BFIF (Big Friggin' Investment Firm). Let's say the Financial Advisor works for BFFF. In most cases, both the name of the firm (the Custodian) and the name of the Advisor is going to be on the client's statement. If the client calls the Custodian and gives them the account number, they should be able to connect them with the Financial Advisor responsible for the account. That Financial Advisor should already know about the client's overall situation or should at least be able to ask the correct questions in order to offer advice, assuming he is following the FINRA Know Your Client rules. Now, granted, there are many cases where the client has opened an IRA directly with a Mutual Fund company (your Vanguards, Fidelities, et al) and may have opted not to pay for "advice" and may indeed not have anyone legally able to give him advice. IME it is extremely rare the investment adviser/custodian is also the actual person in position to make actual tax advice. Not impossible, but certainly not the norm for the average person. Of course, on average, most folks don't really have either--the custodian is whoever the employer uses in the employer program and the individual rarely if ever talks to any of them--they may ask a HR person how the plan works or get a selection/choice card once a year or so and that's about the extent of involvement. That again isn't to say that a self-employed individual or the very astute (relatively) employee hasn't taken it upon themself to take advantage of all available services, and has a personal relationship w/ either a specific representative of a large custodial company or w/ a local but it's surely the exception rather than the rule. Virtually everybody I know (and I myself) will still deal w/ the custodian/investment side via the brokerage or investment advisor but use an accountant or other tax service professional for tax advice and possibly preparation as well. I suppose again like many things, there are tendencies to follow different patterns in different locations of the country, but the above surely is what I've seen/been accustomed to rather than the combined-agent so-to-speak scenario. All that said, my response to the suggestion that he "call the fund manager" still stands. There is *no* way the client is going get any advice from the "fund manager" - the person or persons that make the investment decisions within the portfolio. .... I didn't disagree w/ that at all; that's certainly correct and the individual investor isn't even going to get to talk to them to ask; they're just not publicly accessible, even other than as revealed by annual reports and/or prospectus or the (very) rare other announcement/mailing/report. -- |
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