Money & Economics

^^^ well looks like I may have went down a rabbit hole. Think this applies to rollover or one time lump-sum payment...but not sure...

We are going to be pulling out the maximum we can out of my wife's Traditional IRA without jumping to the next tax bracket...

Got excited when I found the above form thinking we could possibly pull out more...
 
David L said:
If this is true we can pull out $30k more and stay at the same 12% tax rate...correct?
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I say no. The traditional IRA distribution is taxed the same as ordinary income. I'm guessing the discrepancy is that the withholding table uses "total income", while the tax rate schedule (tax brackets) uses taxable income. There's probably the amount of typical or average deductions baked into the withholding table.

After dribbling out of my traditional IRA for many years, this will be the last, with the remaining balance dedicated to QCDs.
 
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bigredfish said:
Hmmmm where did that come from?
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Well off of Fidelity's site...we were trying to see what is needed to transfer funds out of her IRA and the W-4F form was mentioned. But thinking this is for rollover and lump sum transfers.

Oh, our Financial guy, yesterday was our annual review, did say we should look into a Roth to transfer to, which he has mentioned this before BUT could not tell us all the ups and downs...
 
I dont think it matters whether you take out $10 or the whole thing, its still a rollover distribution with that amount being added to your other income as taxable.

But yeah, transferring (rollover) to a Roth is the way to go. Thats what we're doing. But tax would be the same if you just deposited it into your checking account.

The problem is there is no other good way to get $ into a Roth without using the IRA/401K rollover method. Outside of that one method, you're stuck only allowed to contribute $8000 per year to the Roth
 
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bigredfish said:
I dont think it matters whether you take out $10 or the whole thing, its still a rollover distribution with that amount being added to your other income as taxable.

But yeah, transferring (rollover) to a Roth is the way to go. Thats what we're doing. But tax would be the same if you just deposited it into your checking account.

The problem is there is no other good way to get $ into a Roth without using the IRA/401K rollover method. Outside of that one method, you're stuck only allowed to contribute $8000 per year to the Roth
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Yeah they were saying if we do transfer to a ROTH we need to do a conversion transfer, guessing that is what they call it. When we went through the online form we got to the point where it ask about much tax to withhold, this is where the IRS form came up and got me all excited, $30k more would be nice if we can stay at the 12% tax rate. I have climbed out of the rabbit hole, back to reality...:)
 
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Correct but a "conversion" doesnt mean it has to be all or nothing. I just did it. Pulled $20K to be safe. Will do that "conversion" or more each year until the 401K is drained.
Same with an IRA

I'd get another opinion. I found when talking to Fidelity I knew more about the process than the agent did. They dont focus on money leaving their system

They wanted to "withhold" from me too.
I said no, you just send me a check made out to Schwab care of my Roth IRA. Then you'll send me a 1099.
I'll take care of my own taxes thank you
 
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Dont do it online.
Get a hold of an agent on the phone and tell them you want a rollover/conversion withdrawl

Their online system is fucked up, AND it tried to force the tax holding. She tried to do it with me on the phone, we went step by step and I showed her it doesnt work.
She agreed.

They cut a check and I had it in 7 days
 
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With Fidelity, and I assume others, a roth conversion is easy. Just transfer money from your traditional IRA to your Roth IRA. Between providers I've always done trustee-to-trustee transfers. Less hassle. Fearing things getting screwed up, if I was wanting to do a conversion AND change providers, I'd do the Roth conversion either before or after the account transfer so as to do the Roth conversion with only one company involved.
 
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I just prefer Schwab's trading platform over Fidelity and we had set the Roth's up many years ago when it was Scottrade, then bought by TDA, then bought by Schwab.

Now that I've done it once, next year I'll simply have it done the same way. Call Fidelity, ask for the rollover check from my 401K to be sent to me made out to Schwab c/o my Roth account#

It gives me a reason to chat with my local Schwab broker when I take the check to them for deposit.
 
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This Was A Major Red Flag In 2008, And Now It Is Happening Again!​

This Was A Major Red Flag In 2008, And Now It Is Happening Again! | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero
www.zerohedge.com www.zerohedge.com

When foreclosure filings started to spike prior to the global financial crisis in 2008, that was a major red flag.

Now it is happening again.

In fact, during the month of October 2025 foreclosure filings were 19 percent higher than they were in October 2024…

In October alone, there were 36,766 foreclosure filings — the first step in the process, when a lender warns a borrower they’re in default. That’s up three percent from September and 19 percent from a year ago.

‘Foreclosure activity continued its steady upward trend in October — the eighth straight month of year-over-year increases,’ said ATTOM CEO Rob Barber.

The rise is stirring uncomfortable memories of 2008, when a wave of foreclosures triggered the worst housing crash in modern US history.
Click to expand...
Read the second paragraph in that quote again.

Foreclosure activity has increased for eight consecutive months.

That is what we call a trend.
 
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bigredfish said:
Dont do it online.
Get a hold of an agent on the phone and tell them you want a rollover/conversion withdrawl

Their online system is fucked up, AND it tried to force the tax holding. She tried to do it with me on the phone, we went step by step and I showed her it doesnt work.
She agreed.

They cut a check and I had it in 7 days
Click to expand...
Wow, thank you...great info...yeah we are in the same boat, trying to now figure out if Interest made on an Annuity counts as Income. Seems every time I search for something another term comes up. Ordinary income vs. Earned income, whatha? lol

The wife and I each got talked into 5 year Annuities last year which I just got my yearly statement showing the Interest it made. 4.45%, so it is not bad. Now I need to figure if the Interest applies towards our AGI, so I can figure our Total Income, to figure out how much we can pull out of the wife's IRA to stay under the $95k threshold to stay in the 12% tax bracket...lol She had a CD mature this year too which I now have those figures, waiting on her Annuity statement, if she gets one...
 
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bigredfish said:

This Was A Major Red Flag In 2008, And Now It Is Happening Again!​

This Was A Major Red Flag In 2008, And Now It Is Happening Again! | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero
www.zerohedge.com www.zerohedge.com

When foreclosure filings started to spike prior to the global financial crisis in 2008, that was a major red flag.

Now it is happening again.

In fact, during the month of October 2025 foreclosure filings were 19 percent higher than they were in October 2024…


Read the second paragraph in that quote again.

Foreclosure activity has increased for eight consecutive months.

That is what we call a trend.
Click to expand...
Our house before last was a Foreclosure, this was early 90s when you could get a pretty good deal on Foreclosures, it was either a Fannie Mae or Freddie Mac, one sold fixer uppers, the other sold them fixed. Ours was new carpet and new paint, but both though were cheaply done we found out later, hey it was our first house, we did not know...

Anyway, when we looked for our next house the Foreclosure market was much different, they were wanting almost the same price as others non-foreclosures were selling for, so no advantage to buy a Foreclosure.
 
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David L said:
Wow, thank you...great info...yeah we are in the same boat, trying to now figure out if Interest made on an Annuity counts as Income. Seems every time I search for something another term comes up. Ordinary income vs. Earned income, whatha? lol

The wife and I each got talked into 5 year Annuities last year which I just got my yearly statement showing the Interest it made. 4.45%, so it is not bad. Now I need to figure if the Interest applies towards our AGI, so I can figure our Total Income, to figure out how much we can pull out of the wife's IRA to stay under the $95k threshold to stay in the 12% tax bracket...lol She had a CD mature this year too which I now have those figures, waiting on her Annuity statement, if she gets one...
Click to expand...

Again I'm not a CPA or Financial planner, I eat crayons, But....

We have two 5yr Annuities. The interest income from them is tax deferred until you withdraw it. Just like a 401K, or Treasuries held like iBonds

If the investment will eventually have RMD's or an end date its likely tax deferred.

CD's, brokerage accounts, checking/savings that pay interest (we have a MM savings acct at local bank that pays 3+%, used to be 4.75%), etc that you get a cash payout from or that interest is accumulated and funds immediately available for your use is taxable and you'll get 1099's (or whatever form they use) showing those taxable income gains which ARE used as part of your regular income and add to your MAGI for the year

Nice thing: Roth's are free money! No tax on gains forever.
 
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bigredfish said:
Again I'm not a CPA or Financial planner, I eat crayons, But....

We have two 5yr Annuities. The interest income from them is tax deferred until you withdraw it. Just like a 401K, or Treasuries held like iBonds

If the investment will eventually have RMD's or an end date its likely tax deferred.

CD's, brokerage accounts, checking/savings that pay interest (we have a MM savings acct at local bank that pays 3+%, used to be 4.75%), etc that you get a cash payout from or that interest is accumulated and funds immediately available for your use is taxable and you'll get 1099's (or whatever form they use) showing those taxable income gains which ARE used as part of your regular income and add to your MAGI for the year

Nice thing: Roth's are free money! No tax on gains forever.
Click to expand...
Thank you very much for this help. We were told when the Annuity matures we could either extend it, well I think transfer it to a new Annuity, or cash it out. So tax on the Interest made after the 5 years will come in a 1099-INT? Right? For the wife, it will be the year of her first RMD...
 
Thats my understanding. At 5yrs when it matures if we don't roll it over, the gains will be taxable that year.

We're in year 2 of our Annuities and got no tax form last year. We have one fixed at 5.25 and another that was supposed to follow their index of the S&P index with no downside which didn/t perform :mad: Fortunately, we're allowed a strategy reallocation (within their set of choices) how to allocate within the Annuity each year at inception date, and we changed that to a fixed offer of 4.5 going forward
 
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^^^
Dang now thinking about it, that year that both Annuities mature will pretty much stop us from pulling out anything out of the wife's IRA, that is if we cash in...but, her Annuity is in her IRA, mine is not, so my money has already been taxed, except the Interest it makes...
 
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