On Tue, 21 Apr 2015 22:01:48 -0400, wrote:

On Tue, 21 Apr 2015 21:02:41 -0400, krw wrote:

On Tue, 21 Apr 2015 12:46:49 -0400, "dadiOH"
wrote:

wrote:
A house has a much better chance of being a "good investment" than a
vehicle, for sure||
You need to look at what it would cost to rent "the same"
accomodation, buying too much house is seldom a good investment.
Buying good basic shelter USUALLY is.

I've been in this house 34 years this June. Paid $65K-ish for it.
It's worth $350K-ish today. Spent another 3\$35,000 more or less on
renovations and repairs and $50,000 more or less on taxes. Renting a 3
bedroom family home when I bought was over $800 per month here - over
$2500 today.
Utility costs would have been similar

Rent would have amounted to well over $500,000 for the duration and I
would not have an assett at the end.

Comes out about 4 times the cost to rent. Can't beat that as an
"investment" - even IF the house had not appreciated one cent over the
34 years

General "words of wisdom" in real estate are, "Rent where you live, own what
you rent".

That seems contradictory but it means rent where you live so you have
capital to buy rentals...let the rental income pay the mortgage, taxes, etc.
Suppose you buy a rental house worth 150,000 with, say, 15K down and a few
years later you sell it for $180,000. ROI is 200%.

...and if you live in it (two years out of five) that ROI is tax free.
There once was a time when this was a foolproof plan. Not so much
anymore.

But there are better deals. House next to me sits on 12 acres purchased for
60K or so in 1996. The buyer put a prefab garage (modified into a 1 bedroom
house) on it and added a 28K prefab barn elsewhere on the property. He sold
all 6-7 years later for $287,000. That buyer was foreclosed upon in the
fall of 2013 for 51K. An investor bought it from the bank for 40K and sold
it a few months later for 133K. THAT's making money

Sure, sometimes you just can't lose. ...until you do.
In the USA you have the added benefit that your mortgage interest is
tax deductible (on your primary residence? or any?)

Any residence, with some restrictions at the very top end. The
mortgage interest deduction applies to vacation homes, including boats
and RVs, as well. Of course interest on rental property is deductible
as a business expense, as well.

On Tuesday, April 21, 2015 at 10:02:03 PM UTC-4, wrote:
On Tue, 21 Apr 2015 21:02:41 -0400, krw wrote:

On Tue, 21 Apr 2015 12:46:49 -0400, "dadiOH"
wrote:

wrote:
A house has a much better chance of being a "good investment" than a
vehicle, for sure||
You need to look at what it would cost to rent "the same"
accomodation, buying too much house is seldom a good investment.
Buying good basic shelter USUALLY is.

I've been in this house 34 years this June. Paid $65K-ish for it.
It's worth $350K-ish today. Spent another 3\$35,000 more or less on
renovations and repairs and $50,000 more or less on taxes. Renting a 3
bedroom family home when I bought was over $800 per month here - over
$2500 today.
Utility costs would have been similar

Rent would have amounted to well over $500,000 for the duration and I
would not have an assett at the end.

Comes out about 4 times the cost to rent. Can't beat that as an
"investment" - even IF the house had not appreciated one cent over the
34 years

General "words of wisdom" in real estate are, "Rent where you live, own what
you rent".

That seems contradictory but it means rent where you live so you have
capital to buy rentals...let the rental income pay the mortgage, taxes, etc.
Suppose you buy a rental house worth 150,000 with, say, 15K down and a few
years later you sell it for $180,000. ROI is 200%.

...and if you live in it (two years out of five) that ROI is tax free.
There once was a time when this was a foolproof plan. Not so much
anymore.

But there are better deals. House next to me sits on 12 acres purchased for
60K or so in 1996. The buyer put a prefab garage (modified into a 1 bedroom
house) on it and added a 28K prefab barn elsewhere on the property. He sold
all 6-7 years later for $287,000. That buyer was foreclosed upon in the
fall of 2013 for 51K. An investor bought it from the bank for 40K and sold
it a few months later for 133K. THAT's making money

Sure, sometimes you just can't lose. ...until you do.
In the USA you have the added benefit that your mortgage interest is
tax deductible (on your primary residence? or any?)

Straight from the source. Click on the Qualified a Home link.

http://www.irs.gov/publications/p936...link1000229900

DerbyDad03 wrote:
On Tuesday, April 21, 2015 at 12:26:57 PM UTC-4, dadiOH wrote:
krw wrote:
On Mon, 20 Apr 2015 12:48:37 -0700 (PDT), DerbyDad03
wrote:

Sometimes life insurance policies can "pay off" twice. Once when
the
owner sells it, then again when the insured passes away.

No, once you sell an insurance policy it's no longer in force.

Incorrect.

Worse, the life payout is reduced by the value of the policy.

?? When the insured dies the owner of the policy receives the full
amount
of the policy's death benefit.

Let's be clear here.

When the insured dies the *beneficiary* (or beneficiaries) of the
policy receives the full amount of the policy's death benefit.

Yes, of course. My fingers and brain were disconnected.

krw wrote:
On Tue, 21 Apr 2015 12:26:38 -0400, "dadiOH"
wrote:

krw wrote:
On Mon, 20 Apr 2015 12:48:37 -0700 (PDT), DerbyDad03
wrote:

Sometimes life insurance policies can "pay off" twice. Once when
the owner sells it, then again when the insured passes away.

No, once you sell an insurance policy it's no longer in force.

Incorrect.

Not.

Is not.


Worse, the life payout is reduced by the value of the policy.

?? When the insured dies the owner of the policy receives the full
amount of the policy's death benefit.

The *insurance* value is reduced by the "cash value". The beneficiary
only gets the face value.

Of course. Why would you think otherwise?

Bill wrote:

What do you
advise about selling calls?

I always avoided options except for covered calls.
--

dadiOH
____________________________

Winters getting colder? Tired of the rat race?
Taxes out of hand? Maybe just ready for a change?
Check it out... http://www.floridaloghouse.net

On 4/21/2015 11:23 PM, krw wrote:


Sure, sometimes you just can't lose. ...until you do.
In the USA you have the added benefit that your mortgage interest is
tax deductible (on your primary residence? or any?)

Any residence, with some restrictions at the very top end. The
mortgage interest deduction applies to vacation homes, including boats
and RVs, as well. Of course interest on rental property is deductible
as a business expense, as well.


Interest on a car loan is NOT deductible, but it is on a home equity
loan. Some people take the home equity loan and then use the money to
buy a car. Not legal, but done every day.

On Wed, 22 Apr 2015 08:44:46 -0400, Ed Pawlowski wrote:

On 4/21/2015 11:23 PM, krw wrote:


Sure, sometimes you just can't lose. ...until you do.
In the USA you have the added benefit that your mortgage interest is
tax deductible (on your primary residence? or any?)

Any residence, with some restrictions at the very top end. The
mortgage interest deduction applies to vacation homes, including boats
and RVs, as well. Of course interest on rental property is deductible
as a business expense, as well.


Interest on a car loan is NOT deductible, but it is on a home equity
loan. Some people take the home equity loan and then use the money to
buy a car. Not legal, but done every day.

Of course it's legal. There is *nothing* in the law that says what
you have to use your money for.

On Wednesday, April 22, 2015 at 8:44:44 AM UTC-4, Ed Pawlowski wrote:
On 4/21/2015 11:23 PM, krw wrote:


Sure, sometimes you just can't lose. ...until you do.
In the USA you have the added benefit that your mortgage interest is
tax deductible (on your primary residence? or any?)

Any residence, with some restrictions at the very top end. The
mortgage interest deduction applies to vacation homes, including boats
and RVs, as well. Of course interest on rental property is deductible
as a business expense, as well.


Interest on a car loan is NOT deductible, but it is on a home equity
loan.

It's never safe to simple say "it is on a home equity loan".

Even on a home equity loan/line of credit, there are some tax deductibility limitations related to the date of the loan, the amount of the debt, the FMV of the home, etc.

It's all explained he

http://www.irs.gov/publications/p936...link1000230008

Some people take the home equity loan and then use the money to
buy a car. Not legal, but done every day.


There is nothing illegal about buying a car (or anything else) with Home Equity debt or even with Home Acquisition debt and you can still deduct the interest (within all applicable limitations, of course)

Here's a fun one: You can pay cash for a home, then take out a *first* mortgage, spend all of the money on a fabulous vacation and then deduct the interest as if you bought the house with the proceeds from the loan. It all depends on the timing between the purchase and the closing on the mortgage.

I know a couple that withdrew a huge sum from the wife's IRA and bought a house with it. She paid no income tax on the withdrawal. They then withdrew the same amount of money from the husband's IRA and deposited it into the wife's IRA. He paid no income tax on the withdrawal. They then took out a mortgage on the house they bought and deposited the loan proceeds into his IRA. Now they take the tax deduction on the mortgage interest every year. Once again, it's all in the timing of the transactions.

DerbyDad03 wrote:

I know a couple that withdrew a huge sum from the wife's IRA and
bought a house with it. She paid no income tax on the withdrawal.
They then withdrew the same amount of money from the husband's IRA
and deposited it into the wife's IRA. He paid no income tax on the
withdrawal. They then took out a mortgage on the house they bought
and deposited the loan proceeds into his IRA. Now they take the tax
deduction on the mortgage interest every year. Once again, it's all
in the timing of the transactions.

Roth IRAs? If not, why no tax?

--

dadiOH
____________________________

Winters getting colder? Tired of the rat race?
Taxes out of hand? Maybe just ready for a change?
Check it out... http://www.floridaloghouse.net

On Wednesday, April 22, 2015 at 3:04:55 PM UTC-4, dadiOH wrote:
DerbyDad03 wrote:

I know a couple that withdrew a huge sum from the wife's IRA and
bought a house with it. She paid no income tax on the withdrawal.
They then withdrew the same amount of money from the husband's IRA
and deposited it into the wife's IRA. He paid no income tax on the
withdrawal. They then took out a mortgage on the house they bought
and deposited the loan proceeds into his IRA. Now they take the tax
deduction on the mortgage interest every year. Once again, it's all
in the timing of the transactions.

Roth IRAs? If not, why no tax?

Traditional IRAs, not Roths.

Aren't you also curious as to how the husband could withdraw a large sum of money from his IRA and deposit it into his wife's IRA? (By "large" I mean about $150K)

On 4/22/2015 12:25 PM, krw wrote:

Of course it's legal. There is *nothing* in the law that says what
you have to use your money for.

And then came the :affordable Care Act"...

On Wed, 22 Apr 2015 08:19:48 -0400, "dadiOH"
wrote:

krw wrote:
On Tue, 21 Apr 2015 12:26:38 -0400, "dadiOH"
wrote:

krw wrote:
On Mon, 20 Apr 2015 12:48:37 -0700 (PDT), DerbyDad03
wrote:

Sometimes life insurance policies can "pay off" twice. Once when
the owner sells it, then again when the insured passes away.

No, once you sell an insurance policy it's no longer in force.

Incorrect.

Not.

Is not.

You're wrong but obviously don't care.

Worse, the life payout is reduced by the value of the policy.

?? When the insured dies the owner of the policy receives the full
amount of the policy's death benefit.

The *insurance* value is reduced by the "cash value". The beneficiary
only gets the face value.

Of course. Why would you think otherwise?

Because people think they're buying insurance. The insurance they're
buying is decreasing in value. If you take a loan against the
insurance, thpayout is reduced by that loan. It's a **** product.

If you are thinking of a policy that earns and therefore has an ever
increasing cash value, that cash value may get very close to the
death benefit value of the policy but that has nothing to do with
the death benefit. If the owner of the policy has borrowed from the
cash value, THEN the death benefit is reduced by the amount borrowed
plus interest.

I thought you said it had nothing to do with the death benefit!

It does ONLY if some of that benefit was used before the insured died. If
you borrowed from a bank using a savings account as security and then died
without pying off theloan,where do you think the bank is going to get their
money?

If you haven't got it, it's a loss. No, you're wrong. Whole life
insurance is really two products glued together. It's an *expensive*
sinking insurance policy in parallel with a ****-poor savings account,
all wrapped up in an uninsured product. IOW, *crap*.

The fact is that this sort of **** product is really two pieces of ****.
First, there is an overly0expensive insurance policy that gets reduced
by the cash value each year.

Where are you getting this stuff? The only thing I know of that may be
reduced is the premium that pays for the insurance. I haven't had to pay a
premium for at least 25 years and the cash value of the policy continued to
grow. The cash value is now near the face value. I could surrender the
policy and get that cash value which would be taxable; OTOH, when I die my
beneficiary gets the FULL face value tax free.

You really should study this stuff more. I'm exactly right. You've
been *screwed*. I guess suckers tend to defend their poor decisions,
kinda like those with time-shares.

Then there is the cash value that grows
at a horrid rate.

That depends upon the policy. Mine at least pays a minimum of 4%, much
better than CDs now. Previously, it was 9%, still better than CDs then.

There may be a small difference but whole life insurance is
*universally* bad. Term insurance is *far* cheaper and if you invest
the difference at a *very* modest rate (i.e. *safe*), you would have
been *way* ahead, particularly over the last thirty years. You got
suckered.

The sum of these is the face value of the policy.
You don't get both!

Your problem is that you simply don't understand what you are talking about.

No, you're just a typical sucker trying to justify his crappy
decisions.

You could buy a $100,000 term policy. It will pay your beneficiary $100,000
when you die. Premiums are cheap, go up every 5 years or so as you age and
become a greater risk. It never has a cash value.

You'll pay about 1/10th the premiums on this account. Take the 90%
and invest it and you'll be *way* ahead. 20 year term insurance is
readily available.

You could buy a $100,000 universal life policy (or enter type). It will
pay your beneficiary $100,000 when you die. Premiums are higher, never go
up. Part of the premium is used to pay for the protection; the rest is
invested by the insurance company and they pay you interest on what they
use. Eventually, the policy has a cash value; you could surrender the
policy and get that cash value. The cash value has nothing to do with the
$100,000 face value.

Either you're the world's biggest sucker or an insurance salesman.

On Wed, 22 Apr 2015 17:07:52 -0500, Richard
wrote:

On 4/22/2015 12:25 PM, krw wrote:

Of course it's legal. There is *nothing* in the law that says what
you have to use your money for.

And then came the :affordable Care Act"...

OK, you got me there. :-(

krw wrote:
On Wed, 22 Apr 2015 08:19:48 -0400, "dadiOH"

I thought you said it had nothing to do with the death benefit!

It does ONLY if some of that benefit was used before the insured
died. If you borrowed from a bank using a savings account as
security and then died without pying off theloan,where do you think
the bank is going to get their money?

If you haven't got it, it's a loss.

Wrong. Again. The bank gets it from the savings account that secured it.
Just like an insurance company recovers any unpaid loans from a policy from
the death benefit.

I give up on the rest of your rantings, you are too far gone.

DerbyDad03 wrote:
On Wednesday, April 22, 2015 at 3:04:55 PM UTC-4, dadiOH wrote:
DerbyDad03 wrote:

I know a couple that withdrew a huge sum from the wife's IRA and
bought a house with it. She paid no income tax on the withdrawal.
They then withdrew the same amount of money from the husband's IRA
and deposited it into the wife's IRA. He paid no income tax on the
withdrawal. They then took out a mortgage on the house they bought
and deposited the loan proceeds into his IRA. Now they take the tax
deduction on the mortgage interest every year. Once again, it's all
in the timing of the transactions.

Roth IRAs? If not, why no tax?

Traditional IRAs, not Roths.

Aren't you also curious as to how the husband could withdraw a large
sum of money from his IRA and deposit it into his wife's IRA? (By
"large" I mean about $150K)

Yes. Do tell all...

On Wednesday, April 22, 2015 at 9:00:45 PM UTC-4, krw wrote:
On Wed, 22 Apr 2015 08:19:48 -0400, "dadiOH"
wrote:

krw wrote:
On Tue, 21 Apr 2015 12:26:38 -0400, "dadiOH"
wrote:

krw wrote:
On Mon, 20 Apr 2015 12:48:37 -0700 (PDT), DerbyDad03
wrote:

Sometimes life insurance policies can "pay off" twice. Once when
the owner sells it, then again when the insured passes away.

No, once you sell an insurance policy it's no longer in force.

Incorrect.

Not.

Is not.

You're wrong but obviously don't care.


I'm going assume that krw has me in his KF because he hasn't responded to anything I've tried to explain about Life Settlements.

I guess we'll just let him keep believing his incorrect statement that "once you sell an insurance policy it's no longer in force."

On Wednesday, April 22, 2015 at 9:33:26 PM UTC-4, dadiOH wrote:
DerbyDad03 wrote:
On Wednesday, April 22, 2015 at 3:04:55 PM UTC-4, dadiOH wrote:
DerbyDad03 wrote:

I know a couple that withdrew a huge sum from the wife's IRA and
bought a house with it. She paid no income tax on the withdrawal.
They then withdrew the same amount of money from the husband's IRA
and deposited it into the wife's IRA. He paid no income tax on the
withdrawal. They then took out a mortgage on the house they bought
and deposited the loan proceeds into his IRA. Now they take the tax
deduction on the mortgage interest every year. Once again, it's all
in the timing of the transactions.

Roth IRAs? If not, why no tax?

Traditional IRAs, not Roths.

Aren't you also curious as to how the husband could withdraw a large
sum of money from his IRA and deposit it into his wife's IRA? (By
"large" I mean about $150K)

Yes. Do tell all...

In order to facilitate IRA rollovers, the IRS allows an individual to withdraw funds from an IRA (or other qualified retirement plan) and not pay any taxes or penalties as long as the money is replaced within 60 calendars days and as long as they don't do it more than once in any 12 month period. (They are very strict about both of those timing rules...you don't want to play around with them!)

Tom & Sue Jones found their dream home for sale by some very motivated sellers. They had some cash that they had set aside for other purposes but they needed an additional $150K to purchase the home. They had to move very quickly, even before they had put their current home on the market.

Sue withdrew $150K from her IRA and they bought the home for cash. Almost 60 days went by and their original house still hadn't sold, so Tom withdrew $150K from his IRA, gave it to Sue who used it to replace her IRA withdrawal before the 60 day period had expired. A couple of more weeks went by and their house finally sold. Tom took $150K from the proceeds from that sale and put it back into his IRA, again staying within the 60 day "rollover" grace period.

Since the purchase of their dream home had eaten into all of the excess cash they had set aside and the quick move had cost them more than they expected, they went to a bank and took out a small mortgage on the new house. Since the house had been purchased "within the past 90 days" they were able to classify the loan as "house acquisition debt" allowing them to deduct the mortgage interest.

As I said earlier, it's all in the timing of the transactions.

On Wednesday, April 22, 2015 at 9:32:25 PM UTC-4, dadiOH wrote:
krw wrote:
On Wed, 22 Apr 2015 08:19:48 -0400, "dadiOH"

I thought you said it had nothing to do with the death benefit!

It does ONLY if some of that benefit was used before the insured
died. If you borrowed from a bank using a savings account as
security and then died without pying off theloan,where do you think
the bank is going to get their money?

If you haven't got it, it's a loss.

Wrong. Again. The bank gets it from the savings account that secured it.
Just like an insurance company recovers any unpaid loans from a policy from
the death benefit.

I give up on the rest of your rantings, you are too far gone.

Just like he's wrong about the in-force status of an insurance policy that has been sold. I think we should just let him be.

On Wednesday, April 22, 2015 at 10:20:29 PM UTC-4, DerbyDad03 wrote:
On Wednesday, April 22, 2015 at 9:33:26 PM UTC-4, dadiOH wrote:
DerbyDad03 wrote:
On Wednesday, April 22, 2015 at 3:04:55 PM UTC-4, dadiOH wrote:
DerbyDad03 wrote:

I know a couple that withdrew a huge sum from the wife's IRA and
bought a house with it. She paid no income tax on the withdrawal.
They then withdrew the same amount of money from the husband's IRA
and deposited it into the wife's IRA. He paid no income tax on the
withdrawal. They then took out a mortgage on the house they bought
and deposited the loan proceeds into his IRA. Now they take the tax
deduction on the mortgage interest every year. Once again, it's all
in the timing of the transactions.

Roth IRAs? If not, why no tax?

Traditional IRAs, not Roths.

Aren't you also curious as to how the husband could withdraw a large
sum of money from his IRA and deposit it into his wife's IRA? (By
"large" I mean about $150K)

Yes. Do tell all...

In order to facilitate IRA rollovers, the IRS allows an individual to withdraw funds from an IRA (or other qualified retirement plan) and not pay any taxes or penalties as long as the money is replaced within 60 calendars days and as long as they don't do it more than once in any 12 month period. (They are very strict about both of those timing rules...you don't want to play around with them!)

Tom & Sue Jones found their dream home for sale by some very motivated sellers. They had some cash that they had set aside for other purposes but they needed an additional $150K to purchase the home. They had to move very quickly, even before they had put their current home on the market.

Sue withdrew $150K from her IRA and they bought the home for cash. Almost 60 days went by and their original house still hadn't sold, so Tom withdrew $150K from his IRA, gave it to Sue who used it to replace her IRA withdrawal before the 60 day period had expired. A couple of more weeks went by and their house finally sold. Tom took $150K from the proceeds from that sale and put it back into his IRA, again staying within the 60 day "rollover" grace period.

Since the purchase of their dream home had eaten into all of the excess cash they had set aside and the quick move had cost them more than they expected, they went to a bank and took out a small mortgage on the new house. Since the house had been purchased "within the past 90 days" they were able to classify the loan as "house acquisition debt" allowing them to deduct the mortgage interest.

As I said earlier, it's all in the timing of the transactions.

Allow me to clarify one point:

I originally stated: "...the IRS allows an individual to withdraw funds from an IRA (or other qualified retirement plan) and not pay any taxes or penalties as long as the money is replaced within 60 calendars days..."

To be clear, instead of "replaced within 60 calendars days" I should have said "deposited into a qualified retirement account held by the same individual within 60 calendars days".

Since the 60 day rule was put into place to facilitate rollovers, there is no stipulation that the funds must go back into the same account they were withdrawn from, they just need to go back into a qualified retirement account owned by the same individual.

The IRS also doesn't stipulate that they *can't* go back into the same account, thus allowing for what could be considered "60 day loan" from a person's IRA once every 12 months.

On 4/23/2015 9:50 AM, DerbyDad03 wrote:


Allow me to clarify one point:

I originally stated: "...the IRS allows an individual to withdraw
funds from an IRA (or other qualified retirement plan) and not pay
any taxes or penalties as long as the money is replaced within 60
calendars days..."

To be clear, instead of "replaced within 60 calendars days" I should
have said "deposited into a qualified retirement account held by the
same individual within 60 calendars days".

Since the 60 day rule was put into place to facilitate rollovers,
there is no stipulation that the funds must go back into the same
account they were withdrawn from, they just need to go back into a
qualified retirement account owned by the same individual.

The IRS also doesn't stipulate that they *can't* go back into the
same account, thus allowing for what could be considered "60 day
loan" from a person's IRA once every 12 months.


"If" the owner of the traditional IRA does not take possession of the
money and lets one institution transfer IRA funds, FBO of the owner, to
another Institution as the same type of IRA, there is no limit of ONE
movement of money per year.

On Thursday, April 23, 2015 at 1:04:39 PM UTC-4, Leon wrote:
On 4/23/2015 9:50 AM, DerbyDad03 wrote:


Allow me to clarify one point:

I originally stated: "...the IRS allows an individual to withdraw
funds from an IRA (or other qualified retirement plan) and not pay
any taxes or penalties as long as the money is replaced within 60
calendars days..."

To be clear, instead of "replaced within 60 calendars days" I should
have said "deposited into a qualified retirement account held by the
same individual within 60 calendars days".

Since the 60 day rule was put into place to facilitate rollovers,
there is no stipulation that the funds must go back into the same
account they were withdrawn from, they just need to go back into a
qualified retirement account owned by the same individual.

The IRS also doesn't stipulate that they *can't* go back into the
same account, thus allowing for what could be considered "60 day
loan" from a person's IRA once every 12 months.


"If" the owner of the traditional IRA does not take possession of the
money and lets one institution transfer IRA funds, FBO of the owner, to
another Institution as the same type of IRA, there is no limit of ONE
movement of money per year.

This is true, but then it wouldn't be considered a "withdrawal" (actually a "distribution") it would most likely be considered an "direct rollover" or a "trustee-to-trustee transfer". All of those terms tend to get used interchangeably, but they actually have different meanings.

In addition, transfers from one IRA to another IRA within the same institution are not considered rollovers and are therefore not subject to the One-Rollover-Per-Year rule.

However, it should be noted that the IRS got a little stricter in 2015. You used to be able to do multiple IRA "loans" from your IRA within the same 12 month period as long as you used different IRA's. Starting 1/1/2015 the IRS looks at *all* of an individuals IRA's in aggregate, allowing only one such transaction per year.

http://www.irs.gov/Retirement-Plans/...-Per-Year-Rule

DerbyDad03 wrote:

To be clear, instead of "replaced within 60 calendars days" I should
have said "deposited into a qualified retirement account held by the
same individual within 60 calendars days".

Since the 60 day rule was put into place to facilitate rollovers,
there is no stipulation that the funds must go back into the same
account they were withdrawn from, they just need to go back into a
qualified retirement account owned by the same individual.

I'm guessing that a Roth IRA doesn't qualify as a "qualified retirement
account"?

--

dadiOH
____________________________

Winters getting colder? Tired of the rat race?
Taxes out of hand? Maybe just ready for a change?
Check it out... http://www.floridaloghouse.net

On 4/23/2015 2:14 PM, DerbyDad03 wrote:
On Thursday, April 23, 2015 at 1:04:39 PM UTC-4, Leon wrote:
On 4/23/2015 9:50 AM, DerbyDad03 wrote:


Allow me to clarify one point:

I originally stated: "...the IRS allows an individual to
withdraw funds from an IRA (or other qualified retirement plan)
and not pay any taxes or penalties as long as the money is
replaced within 60 calendars days..."

To be clear, instead of "replaced within 60 calendars days" I
should have said "deposited into a qualified retirement account
held by the same individual within 60 calendars days".

Since the 60 day rule was put into place to facilitate
rollovers, there is no stipulation that the funds must go back
into the same account they were withdrawn from, they just need to
go back into a qualified retirement account owned by the same
individual.

The IRS also doesn't stipulate that they *can't* go back into
the same account, thus allowing for what could be considered "60
day loan" from a person's IRA once every 12 months.


"If" the owner of the traditional IRA does not take possession of
the money and lets one institution transfer IRA funds, FBO of the
owner, to another Institution as the same type of IRA, there is no
limit of ONE movement of money per year.

This is true, but then it wouldn't be considered a "withdrawal"
(actually a "distribution") it would most likely be considered an
"direct rollover" or a "trustee-to-trustee transfer". All of those
terms tend to get used interchangeably, but they actually have
different meanings.

Actually a trustee to trustee transfer. And yes they do have different
meanings and why I did not call it a roll over or withdrawal.




In addition, transfers from one IRA to another IRA within the same
institution are not considered rollovers and are therefore not
subject to the One-Rollover-Per-Year rule.

Correct, but to be clear, a Rollover is where the owner actually takes
possession of the money and puts it into another qualified IRA account.
Transfers are not subject to the once a year rule because they are not
roll overs.

On Thursday, April 23, 2015 at 5:49:38 PM UTC-4, Leon wrote:
On 4/23/2015 2:14 PM, DerbyDad03 wrote:
On Thursday, April 23, 2015 at 1:04:39 PM UTC-4, Leon wrote:
On 4/23/2015 9:50 AM, DerbyDad03 wrote:


Allow me to clarify one point:

I originally stated: "...the IRS allows an individual to
withdraw funds from an IRA (or other qualified retirement plan)
and not pay any taxes or penalties as long as the money is
replaced within 60 calendars days..."

To be clear, instead of "replaced within 60 calendars days" I
should have said "deposited into a qualified retirement account
held by the same individual within 60 calendars days".

Since the 60 day rule was put into place to facilitate
rollovers, there is no stipulation that the funds must go back
into the same account they were withdrawn from, they just need to
go back into a qualified retirement account owned by the same
individual.

The IRS also doesn't stipulate that they *can't* go back into
the same account, thus allowing for what could be considered "60
day loan" from a person's IRA once every 12 months.


"If" the owner of the traditional IRA does not take possession of
the money and lets one institution transfer IRA funds, FBO of the
owner, to another Institution as the same type of IRA, there is no
limit of ONE movement of money per year.

This is true, but then it wouldn't be considered a "withdrawal"
(actually a "distribution") it would most likely be considered an
"direct rollover" or a "trustee-to-trustee transfer" All of those
terms tend to get used interchangeably, but they actually have
different meanings.

Actually a trustee to trustee transfer. And yes they do have different
meanings and why I did not call it a roll over or withdrawal.


In addition, transfers from one IRA to another IRA within the same
institution are not considered rollovers and are therefore not
subject to the One-Rollover-Per-Year rule.

Correct, but to be clear, a Rollover is where the owner actually takes
possession of the money and puts it into another qualified IRA account.

This is where the wording on the various IRS pages can be confusing. Depending on what page you read - and in what context - one could argue that you are correct and one could argue that you are wrong. In an effort to keep this friendly, I'll simply point out a few of the many contradictions on the irs.gov pages.

Let's start with the basic definition of a Rollover from the IRS.

http://www.irs.gov/Retirement-Plans/...ee/Definitions

"Rollover - A rollover occurs when a participant directs the transfer of the money in his or her retirement account or IRA to a new plan or IRA."

There is no mention of taking possession or not taking possession, so let's call it "unclear" for the moment. Now consider these 2 scenarios in light of that IRS definition:

Joe quits his job at Company "A" and gets hired at Company "B". He then "directs the transfer" of the funds in his "A" 401(k) to his "B" 401(k). If he were to take possession of the funds, the 401(k) plan would be required to withhold 20% in federal taxes. However, if he requests a "direct rollover" (see the IRS definition of a direct rollover below) he does not take possession yet it is still considered a rollover per the IRS definition. He "directed the transfer" by requesting a "direct rollover".

The same situation would occur if Joe quit/retired/was laid off and "directs the transfer" of the funds in his "A" 401(k) to an IRA via direct rollover. He did not take possession and it is considered a rollover by definition..

Then there's the following from the IRS. Note that they consider both a Direct Rollover" and a "Trustee-to-Trustee transfer" to be a means to "complete a rollover" without the individual taking possession of the funds. Does that mean that these types of movements are rollovers? Based on the title of the section "How do I complete a rollover?" one could argue Yes.

http://www.irs.gov/Retirement-Plans/...-Distributions

"How do I complete a rollover?

Direct rollover - If you're getting a distribution from a retirement plan, you can ask your plan administrator to make the payment directly to another retirement plan or to an IRA. Contact your plan administrator for instructions. The administrator may issue your distribution in the form of a check made payable to your new account. No taxes will be withheld from your transfer amount.

Trustee-to-trustee transfer - If you're getting a distribution from an IRA, you can ask the financial institution holding your IRA to make the payment directly from your IRA to another IRA or to a retirement plan. No taxes will be withheld from your transfer amount.

60-day rollover - If a distribution from an IRA or a retirement plan is paid directly to you, you can deposit all or a portion of it in an IRA or a retirement plan within 60 days. Taxes will be withheld from a distribution from a retirement plan (see below), so you'll have to use other funds to roll over the full amount of the distribution."

But - and this is a big but - let's see what they say he

http://www.irs.gov/Retirement-Plans/...-Per-Year-Rule

"Direct transfers of IRA money are not limited"

"This change won't affect your ability to transfer funds from one IRA trustee directly to another, because this type of transfer isn't a rollover (Revenue Ruling 78-406, 1978-2 C.B. 157). The one-rollover-per-year rule of Internal Revenue Code Section 408(d)(3)(B) applies only to rollovers"

So, depending on which section of irs.gov you read, it's not not easy to figure out what they define as a rollover, although one might want to give a higher weighting to a Revenue Ruling than a FAQ. ;-)

On 4/23/2015 6:47 PM, DerbyDad03 wrote:

So, depending on which section of irs.gov you read, it's not not easy to figure out what they define as a rollover, although one might want to give a higher weighting to a Revenue Ruling than a FAQ. ;-)

I'm beginning to like the fact that all I have to worry about these days
is RMD.

--
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https://plus.google.com/+KarlCaillouet/posts
http://www.custommade.com/by/ewoodshop/
KarlCaillouet@ (the obvious)

On Thursday, April 23, 2015 at 8:12:45 PM UTC-4, Swingman wrote:
On 4/23/2015 6:47 PM, DerbyDad03 wrote:

So, depending on which section of irs.gov you read, it's not not easy to figure out what they define as a rollover, although one might want to give a higher weighting to a Revenue Ruling than a FAQ. ;-)

I'm beginning to like the fact that all I have to worry about these days
is RMD.


....and let's hope you have to worry about it for long, long time.

On Thursday, April 23, 2015 at 4:44:58 PM UTC-4, dadiOH wrote:
DerbyDad03 wrote:

To be clear, instead of "replaced within 60 calendars days" I should
have said "deposited into a qualified retirement account held by the
same individual within 60 calendars days".

Since the 60 day rule was put into place to facilitate rollovers,
there is no stipulation that the funds must go back into the same
account they were withdrawn from, they just need to go back into a
qualified retirement account owned by the same individual.

I'm guessing that a Roth IRA doesn't qualify as a "qualified retirement
account"?


A Roth is a qualified retirement account. If I said something that made you think otherwise, I apologize.

What made you ask that question?

DerbyDad03 wrote:
On Thursday, April 23, 2015 at 4:44:58 PM UTC-4, dadiOH wrote:
DerbyDad03 wrote:

To be clear, instead of "replaced within 60 calendars days" I should
have said "deposited into a qualified retirement account held by the
same individual within 60 calendars days".

Since the 60 day rule was put into place to facilitate rollovers,
there is no stipulation that the funds must go back into the same
account they were withdrawn from, they just need to go back into a
qualified retirement account owned by the same individual.

I'm guessing that a Roth IRA doesn't qualify as a "qualified
retirement
account"?


A Roth is a qualified retirement account. If I said something that
made you think otherwise, I apologize.

What made you ask that question?

The business about being able to transfer from one qualified account to
another.

If one can transfer a regular IRA, funded with pre-tax dollars which are
taxable when withdrawn or distributed, to a Roth IRA, which is funded with
post-tax dollars which are NOT taxed when distributed or withdrawn, it seems
to me there is a loop hole. IME, the IRS really frowns on loop holes but if
this exists, I want in on it

--

dadiOH
____________________________

Winters getting colder? Tired of the rat race?
Taxes out of hand? Maybe just ready for a change?
Check it out... http://www.floridaloghouse.net

On 4/24/2015 1:13 PM, dadiOH wrote:
DerbyDad03 wrote:
On Thursday, April 23, 2015 at 4:44:58 PM UTC-4, dadiOH wrote:
DerbyDad03 wrote:

To be clear, instead of "replaced within 60 calendars days" I should
have said "deposited into a qualified retirement account held by the
same individual within 60 calendars days".

Since the 60 day rule was put into place to facilitate rollovers,
there is no stipulation that the funds must go back into the same
account they were withdrawn from, they just need to go back into a
qualified retirement account owned by the same individual.

I'm guessing that a Roth IRA doesn't qualify as a "qualified
retirement
account"?


A Roth is a qualified retirement account. If I said something that
made you think otherwise, I apologize.

What made you ask that question?

The business about being able to transfer from one qualified account to
another.

If one can transfer a regular IRA, funded with pre-tax dollars which are
taxable when withdrawn or distributed, to a Roth IRA, which is funded with
post-tax dollars which are NOT taxed when distributed or withdrawn, it seems
to me there is a loop hole. IME, the IRS really frowns on loop holes but if
this exists, I want in on it


If you remove money from a traditional IRA and move it to a Roth IRA you
have to do a "conversion". Essentially the conversion allows you to
move money into a ROTH in excess of amounts normally allowed per year
however the amount converted adds to your yearly income and you pay
taxes on that money and perhaps at a higher rate if the amount puts you
in a higher tax bracket.

http://www.rothira.com/roth-ira-conversion-rules

On Friday, April 24, 2015 at 3:06:27 PM UTC-4, Leon wrote:
On 4/24/2015 1:13 PM, dadiOH wrote:
DerbyDad03 wrote:
On Thursday, April 23, 2015 at 4:44:58 PM UTC-4, dadiOH wrote:
DerbyDad03 wrote:

To be clear, instead of "replaced within 60 calendars days" I should
have said "deposited into a qualified retirement account held by the
same individual within 60 calendars days".

Since the 60 day rule was put into place to facilitate rollovers,
there is no stipulation that the funds must go back into the same
account they were withdrawn from, they just need to go back into a
qualified retirement account owned by the same individual.

I'm guessing that a Roth IRA doesn't qualify as a "qualified
retirement
account"?


A Roth is a qualified retirement account. If I said something that
made you think otherwise, I apologize.

What made you ask that question?

The business about being able to transfer from one qualified account to
another.

If one can transfer a regular IRA, funded with pre-tax dollars which are
taxable when withdrawn or distributed, to a Roth IRA, which is funded with
post-tax dollars which are NOT taxed when distributed or withdrawn, it seems
to me there is a loop hole. IME, the IRS really frowns on loop holes but if
this exists, I want in on it


If you remove money from a traditional IRA and move it to a Roth IRA you
have to do a "conversion". Essentially the conversion allows you to
move money into a ROTH in excess of amounts normally allowed per year
however the amount converted adds to your yearly income and you pay
taxes on that money and perhaps at a higher rate if the amount puts you
in a higher tax bracket.

http://www.rothira.com/roth-ira-conversion-rules

Another reason to do Roth conversions is to reduce the amount of money in your traditional IRA's so that your RMD will be lower once you reach 70 1/2.

There are Roth conversion calculators that can help determine if paying a little bit more in taxes each year via Roth conversions will result in a smaller long term tax bill. Let's say you are in the the 15% bracket now but projections show that your RMD's will push you into the 25% bracket. It may make sense to do enough of a Roth conversion each year to get yourself to the top of the 15% bracket, reducing the amount in your IRA's so that when you reach 70 1/2 you stay in the 15% bracket even with your RMD income.

Of course, if you are going to Roth conversions for any reason, you should have money to pay the income taxes already available in non-IRA funds. It doesn't make sense to take a gross amount out the IRA, pay the taxes with part of it and convert just the net amount.

On 4/24/2015 10:03 PM, DerbyDad03 wrote:
On Friday, April 24, 2015 at 3:06:27 PM UTC-4, Leon wrote:
On 4/24/2015 1:13 PM, dadiOH wrote:
DerbyDad03 wrote:
On Thursday, April 23, 2015 at 4:44:58 PM UTC-4, dadiOH wrote:
DerbyDad03 wrote:

To be clear, instead of "replaced within 60 calendars days"
I should have said "deposited into a qualified retirement
account held by the same individual within 60 calendars
days".

Since the 60 day rule was put into place to facilitate
rollovers, there is no stipulation that the funds must go
back into the same account they were withdrawn from, they
just need to go back into a qualified retirement account
owned by the same individual.

I'm guessing that a Roth IRA doesn't qualify as a "qualified
retirement account"?


A Roth is a qualified retirement account. If I said something
that made you think otherwise, I apologize.

What made you ask that question?

The business about being able to transfer from one qualified
account to another.

If one can transfer a regular IRA, funded with pre-tax dollars
which are taxable when withdrawn or distributed, to a Roth IRA,
which is funded with post-tax dollars which are NOT taxed when
distributed or withdrawn, it seems to me there is a loop hole.
IME, the IRS really frowns on loop holes but if this exists, I
want in on it


If you remove money from a traditional IRA and move it to a Roth
IRA you have to do a "conversion". Essentially the conversion
allows you to move money into a ROTH in excess of amounts normally
allowed per year however the amount converted adds to your yearly
income and you pay taxes on that money and perhaps at a higher rate
if the amount puts you in a higher tax bracket.

http://www.rothira.com/roth-ira-conversion-rules

Another reason to do Roth conversions is to reduce the amount of
money in your traditional IRA's so that your RMD will be lower once
you reach 70 1/2.

IMHO the only drawback to a RMD is that you have to pay taxes on that
amount which is being withdrawn. Converting means you will pay those
taxes earlier. Converting does not mean you will get out of paying
taxes. Hopefully if you have done your projections and calculations
correctly you will pay less taxes in the long run by converting.

Converting would make more since if Roth investments loose value during
a down turn in the market. You essentially still own the same amount of
shares and or funds but since they are less valuable they would be taxed
less during the conversion.

On Sunday, April 26, 2015 at 11:02:53 AM UTC-4, Leon wrote:
On 4/24/2015 10:03 PM, DerbyDad03 wrote:
On Friday, April 24, 2015 at 3:06:27 PM UTC-4, Leon wrote:
On 4/24/2015 1:13 PM, dadiOH wrote:
DerbyDad03 wrote:
On Thursday, April 23, 2015 at 4:44:58 PM UTC-4, dadiOH wrote:
DerbyDad03 wrote:

To be clear, instead of "replaced within 60 calendars days"
I should have said "deposited into a qualified retirement
account held by the same individual within 60 calendars
days".

Since the 60 day rule was put into place to facilitate
rollovers, there is no stipulation that the funds must go
back into the same account they were withdrawn from, they
just need to go back into a qualified retirement account
owned by the same individual.

I'm guessing that a Roth IRA doesn't qualify as a "qualified
retirement account"?


A Roth is a qualified retirement account. If I said something
that made you think otherwise, I apologize.

What made you ask that question?

The business about being able to transfer from one qualified
account to another.

If one can transfer a regular IRA, funded with pre-tax dollars
which are taxable when withdrawn or distributed, to a Roth IRA,
which is funded with post-tax dollars which are NOT taxed when
distributed or withdrawn, it seems to me there is a loop hole.
IME, the IRS really frowns on loop holes but if this exists, I
want in on it


If you remove money from a traditional IRA and move it to a Roth
IRA you have to do a "conversion". Essentially the conversion
allows you to move money into a ROTH in excess of amounts normally
allowed per year however the amount converted adds to your yearly
income and you pay taxes on that money and perhaps at a higher rate
if the amount puts you in a higher tax bracket.

http://www.rothira.com/roth-ira-conversion-rules

Another reason to do Roth conversions is to reduce the amount of
money in your traditional IRA's so that your RMD will be lower once
you reach 70 1/2.

IMHO the only drawback to a RMD is that you have to pay taxes on that
amount which is being withdrawn. Converting means you will pay those
taxes earlier. Converting does not mean you will get out of paying
taxes.

I never said a conversion gets you out of paying taxes

Hopefully if you have done your projections and calculations
correctly you will pay less taxes in the long run by converting.

That is exactly what I said. By converting enough assets at a lower tax rate early on, you can sometimes avoid ending up in a higher tax bracket once you are forced to take your RMD. Since the RMD is based on the value of your IRA's at the end of each year, reducing the amount in your IRA's reduces your RMD.


Converting would make more since if Roth investments loose value during
a down turn in the market. You essentially still own the same amount of
shares and or funds but since they are less valuable they would be taxed
less during the conversion.

The only way to pay "less" taxes during a conversion is to convert fewer dollars. In my experience, Roth conversions are typically done based on a dollar amount, and then the number of shares to move is calculated to get as close to that dollar amount as possible. When a specific dollar amount is converted, it's true that you can convert more shares in a down market, but it doesn't change the taxes due. A $30K conversion is a $30K conversion whether you move 1 "high priced" share or 100 "low priced" shares. You still get taxed on $30K of income.

In fact, if the market goes down in the year *after* the conversion, it often makes sense to do a recharacterization and "undo" the conversion. There is no sense in paying taxes on a $30K conversion if the converted assets are only worth $15K. That's one of the reasons the IRS allows you to recharacterize the assets up until October 15th of the following year.