Money & Economics

David L said:
So should we open a small ROTH (conversion) now so we can start the 5 year rule? Not sure I fully understand the 5 year rule I know it is about withdrawals and no taxes, but does that also apply to our kids after we pass, sounds like we may need to start one. But is it for the money put in (conversion) for the year it was put in that the 5 year rule starts for that money? lol I am confusing myself.

In other words, $1000 2026, 5 years would be 2031, then we put in another $1000 in 2027 so 5 year rule on that money would be 2032.

This is not a big deal to us, we won't be withdrawing from it, we have enough liquid cash available if we need it, one thing about Brokerage CDs, they can be sold, Bonds also plus we have a surplus in the Money Market, which is down to 3.4% but it is better than nothing, which was the case a few years back in savings. We just want to make it easy for our kids to get to while we are in Heaven where there are No ROTH IRAs :)

From Fidelity (But still abit confusing to me):
View attachment 243282

I do see above where Death can be an exemption so hopefully that means the 5-year rule would not apply to our kids...plus supposedly 5-year rule does not apply to the amount originally converted and only the gains but for us we will be converting a little each year until we deplete the wife's Traditional IRA, like @bigredfish is doing...but the last sentence kinda answers that question in that it looks like the 5-year rule starts with each transfer/conversion.

But as said before, none of this matters to us as long as we don't try to withdraw and hopefully it does not apply to our kids upon our death.

We need to gather our questions and make an appointment with our Broker... ;) :)
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Good luck, let me know what you find out. I talked to my broker at JPM Wealth Mgnt and our CPA (40 yrs in business) and got different answers :rofl:
 
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bigredfish said:
Good luck, let me know what you find out. I talked to my broker at JPM Wealth Mgnt and our CPA (40 yrs in business) and got different answers :rofl:
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Funny you say that, the few times we talked to some reps, not our Agent, at our Brokerage firm got the same thing, different answers and alot of rules, well if this then that...haha.

It will be probably sometime next month though for us when we can get an appt. with our Agent, he normally pushes us off to his assistants since he is/seems real busy. He never answers our calls, haha, I am sure he sees my number and says Oh Hell No, haha...actually in a way I know this is true, he will answer, sometimes, my wife's phone. I found this true will others, haha. I love to call with her phone and hear their sighs...hahaha I am like those people in those don't be like your parents Progressive commercials. The wife says, yep that is you honey, LOL

Have a good weekend, today is take the wife to the Hair Salon day and hopefully find a place that will do a boot shine on her new boots for tomorrow's Mother's Day...

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Man there is nothing more sexier than a Cowgirl in boots, haha
 
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I wouldn’t get too excited about the obviously fake job numbers for April. Remember revisions occur first 2 months after a monthly report.

Example:
February was revised down. Again.
The initial report said a loss of -92,000 jobs.
Feb. was revised down by 41,000 to -133,000 in April.
And Feb. was just revised down AGAIN by another 23,000 jobs today.
-156k jobs lost in February.

Nobody believes the jobs report
 
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Intel popped $13 on a deal with apple that might add 5c per share earnings in 4-5 years.
that is the stage of the market we are currently in... $INTC

 
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Jobs Report Brings Sunny Headline, Stormy Internals

115,000 Jobs Added - Just Don’t Look Too Close

Payroll Survey Says +115,000
Household Survey -226,000 negative
Forced Part-Time Work Jumped 445K to 4.9 Million

explicitly calls out the part-time surge as one of the most concerning labor-quality signals.)“..These are people who wanted full-time work but were working part time because their hours were cut or they could not find full-time jobs….”https://open.substack.com/pub/coastaljou

 
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Source: Labor Dept

Insane stat: Healthcare and Social Assistance have added nearly 1.8 million private-sector jobs in the US since the end of 2023 while all of other industries combined have lost 127,800 jobs.

 
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David L said:
Yeah, when we briefly looked into transferring to a ROTH we kept getting more and more rules the further we looked. The ROTH is still great option with no tax on gains but need to learn more on our end.
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All of my working life the expert advice was to put as much as you can into a traditional IRA, then draw it out after you retire when you'll be at a lower tax rate. For many, that expert advice results in paying more taxes in the end, if it gets you into deduction phaseouts, IRMMA, and other things that are triggered by AGI. What hits the most people I think is how withdrawing or rolling over from a traditional IRA increases the tax rate for the no tax on social security tax. If you're at the wrong AGI level, it ups the marginal rate by about 10%. One of the few advices I give to others is if it's at all feasible, drain the traditional IRAs before starting social security.

If you're making any charitable donations, QCDs are a great was to help drain the traditional IRA. This year you can stack 2k of non QCD donations on top of the QCDs for the maximum tax reduction.

David L said:
So should we open a small ROTH (conversion) now so we can start the 5 year rule?
Click to expand...

Since I forgot the details I don't want to accidentally say something wrong. It's a travesty that there are two totally separate things called by the same name. It just invites confusion to the point where a lot of CPAs and tax preparers probably have it wrong. They could have made one of the rules for 4 or 6 years to avoid some of the confusion.
 
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Converting before SS would have put us in the very highest bracket for that year.

Converting now at the lowest bracket 12%) we’ve ever been, will bump some income to the 22% rate but that’s still better.
I was able to convert $20K of my 401K last year and just barely stay in the 12% bracket. But at that pace it will take many years to draw down the 401K

Ultimately it’s pay me now or pay me later. But the sooner I get it converted the sooner it starts making tax-free gains and the sooner the 5 year clock starts.

If I knew then what I know now, depending on the details/$ of an employer match, I would have opened the Roth in my 30s, forgo the 401k/IRA, and be much further ahead at retirement with a bigger pile of tax free money
 
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tigerwillow1 said:
All of my working life the expert advice was to put as much as you can into a traditional IRA, then draw it out after you retire when you'll be at a lower tax rate. For many, that expert advice results in paying more taxes in the end, if it gets you into deduction phaseouts, IRMMA, and other things that are triggered by AGI. What hits the most people I think is how withdrawing or rolling over from a traditional IRA increases the tax rate for the no tax on social security tax. If you're at the wrong AGI level, it ups the marginal rate by about 10%. One of the few advices I give to others is if it's at all feasible, drain the traditional IRAs before starting social security.

If you're making any charitable donations, QCDs are a great was to help drain the traditional IRA. This year you can stack 2k of non QCD donations on top of the QCDs for the maximum tax reduction.



Since I forgot the details I don't want to accidentally say something wrong. It's a travesty that there are two totally separate things called by the same name. It just invites confusion to the point where a lot of CPAs and tax preparers probably have it wrong. They could have made one of the rules for 4 or 6 years to avoid some of the confusion.
Click to expand...
bigredfish said:
Converting before SS would have put us in the very highest bracket for that year.

Converting now at the lowest bracket 12%) we’ve ever been, will bump some income to the 22% rate but that’s still better.
I was able to convert $20K of my 401K last year and just barely stay in the 12% bracket. But at that pace it will take many years to draw down the 401K

Ultimately it’s pay me now or pay me later. But the sooner I get it converted the sooner it starts making tax-free gains and the sooner the 5 year clock starts.

If I knew then what I know now, depending on the details/$ of an employer match, I would have opened the Roth in my 30s, forgo the 401k/IRA, and be much further ahead at retirement with a bigger pile of tax free money
Click to expand...
Is it converting before SS or Medicare? Medicare is what got my wife and us with the IRMAA (but to due an inheritance). The wife told me they did not offer a ROTH at her job at the time she started her IRA (traditional) If so it would of been great or she could of still started one herself but neither of us knew. For some reason we had in our heads a ROTH was a savings for college for the kids, maybe that was a selling point back then. We did not put much thought into it, she had a pension plus a 401k with Continental.

Both of us together never made alot of money but we still lived good, bought/owned 2-4 year old cars avg. (but kept them 10+ years), low monthly payments on my first mortgaged house, $400-500 a month ($600 a month after we went to a 26 week payment plan the Mortgage co. offered and paid the loan off in 22 years), and that included property taxes & home owners Ins., think the $30k 30yr conventional loan principle was like $230 a month, this was in the early 90s, it was a foreclosure (Freddie Mac or Fannie Mae can't remember) $33k one story 3 bedroom 2 car garage 1600 sq ft that was 9-10 years old, think the same houses around us were valued at $50k, we put down 3%.

So before a young person jumps in here and dishes us Boomers for our low housing cost, I was the one that actually bought the house on a $25k a year income during my first marriage, my wife did not work then, I wanted a low monthly payment that only one income could handle. For us to travel or do anything I had to get a second job. Actually or our Germany trip (which took two years of saving) I once was working 3 jobs. Day job 8 hours, went after to Pizza delivery job till midnight, then at 3am to 6am I delivered papers (my route was apartments so it was a bag on the shoulder running route, great workout). Though I only lasted 3 months with the 3 jobs :), cut it back down to two. Sadly the wife found a boyfriend with all my working, I got rid of that wife...:) And I get it, houses definitely cost more per income now but purchase within your means, you don't have to buy that 4k sq ft house, you don't have to have a new car (payments) or new phone every few years (believe me I drove many junkers before I could afford better vehicles). Family of 4, I/we grew up in a 1300 sq ft. 3 bedroom house and was fine, very happy and it was in a new neighborhood, think my parents paid around $17k for that new house back in the 70s.

Was in a restaurant in the college town we go to alot for shopping, behind us was some college kids complaining that their starting jobs only paid $32 an hour....wow...try $2 an hour, my first job...lol
 
Yesterday the Mrs and I were out and about.
Filled my gas tank (2024 FJ) at WaWa always have run Premium.$5.19 p/gallon (regular 87 was $4..53)

Stopped to get a card and a few things at Publix:
Plain Ground beef - $8.99 /lb
Package of 2 boneless ribeyes - $22.49 /lb - $47
 
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bigredfish said:
Yesterday the Mrs and I were out and about.
Filled my gas tank (2024 FJ) at WaWa always have run Premium.$5.19 p/gallon (regular 87 was $4..53)

Stopped to get a card and a few things at Publix:
Plain Ground beef - $8.99 /lb
Package of 2 boneless ribeyes - $22.49 /lb - $47
Click to expand...
So last week, paid $3.79 p/gallon (Pain at the Pump) but yesterday at HEB Grocery, same town, it was $3.66 which is sad to say a welcoming site. The ground beef is $8 there too. WTF

I know, I know it is weird taking these gas price pics but it is kinda habit, I use to be the one in our family that would share these but found out they don't care, our kids that is. They spend money like it grows on trees. The old folks in our family still have it in our conversations, haha, I got $$.$$ for gas the other day, lol oh and our health issues too :rofl: I got this growth. hahaha
Funny but when I die, why did this guy have all the gas price pictures on his phone along with pictures of food at restaurants, hahaha
I love a good laugh in the mornings...

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Ya'll have a Happy Mother's Day...

Yesterday, took the wife to get her hair done, man that woman was happy afterwards, amazing what 8 inches does, hahaha, that is how much they cut off...:rolleyes::rofl:
 
Oh we also went shopping too, well she did, Winter sales, she got her this jacket...man my wife looks good at 71, hubba, hubba lol

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Just noticed that Long Horn table :)
 
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Don’t look and you won’t be disappointed… it ain’t all there or we would have had an audit by now

 
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The system IS rigged to keep stupid poor people poor. How many words are in the current tax code, and who can comprehend it all? Would it pass an AI test for clarity and non-contradiction?

Uniparty is the term we use to understand that 2 sides of the same coin is still the same coin. Growing the power of the executive branch while stifling local and personal sovereignty, spending to oblivion, saying yest to everything to get the vote of a stupid person...

Unicorns, there will be so many unicorns you won't know where to keep them all. Leprechauns, you won't have a vault big enough to store all their gold. Aliens- you won't believe all the secrets thousands upon thousands of people have been perfectly preserving. Vote for me and you'll get unicorns, leprechauns, aliens, and I'll throw in Big Foot.

Regarding money, Robert Kiyosaki already said what was needed. Buy assets and minimize liabilities. The rest are details.
 
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