Lady is Thinking About Putting $20K into a CD

[padthaiforlunch]

According to another thread by Franz Kafka, there is no benefit for converting to a Roth. She'll just pay the taxes now and have less to invest.

Feel free to disagree if you want your ethics questioned... (not by me. Plenty of concern trolls on this board.)

Why not convert it to a Roth IRA this will let the product grow tax deffered and as long as you hold it for 5 years and wait until 59 1/2 to take it out the money will be tax free....As for the funding of the Roth that would depend on your risk tolerance and time frame for wanting to access the money...

Since your series 6 registered I'm assume you know the drill.
- What is your goal for the money
- other assets / emergency fund
- time frame before you access the account
- how do you wish to access the money ie all at once/
percentage a year / never touch it etc
- how do you feel about risk etc

 

[Norwayguy]

According to another thread by Franz Kafka, there is no benefit for converting to a Roth. She'll just pay the taxes now and have less to invest.

Feel free to disagree if you want your ethics questioned... (not by me. Plenty of concern trolls on this board.)

But if you read her post it made it sound like she wanted to pay the taxes now while they are lower....so if your going to pay the taxes on your Traditional IRA now and take it out you run into a couple of problems

Item 1 she mentioned she was mid fifties so if she just takes the money out unless she does a 72t distribution she will pay a 10% penalty tax on top of income taxes.

Item 2 if she doesn't put it into a Roth IRA then what a taxible account and all gains are taxed an annuity same issue anything over cost basis is eventually taxed

So if she converts to a Roth she pays the same income taxes as just removing the money from the Trad IRA with no penalty tax she mentioned in the post not needing this money now so if she can wait 5 years and till 59 1/2 then all gains tax free...Maybe if she did a single premium life policy it might provide more initial tax free death benefit but if your complaining about taxes she would still have income and penalty tax plus cv would be less than initial deposit.

 

[Lyn]

But if you read her post it made it sound like she wanted to pay the taxes now while they are lower....so if your going to pay the taxes on your Traditional IRA now and take it out you run into a couple of problems

Item 1 she mentioned she was mid fifties so if she just takes the money out unless she does a 72t distribution she will pay a 10% penalty tax on top of income taxes.

Item 2 if she doesn't put it into a Roth IRA then what a taxible account and all gains are taxed an annuity same issue anything over cost basis is eventually taxed

So if she converts to a Roth she pays the same income taxes as just removing the money from the Trad IRA with no penalty tax she mentioned in the post not needing this money now so if she can wait 5 years and till 59 1/2 then all gains tax free...Maybe if she did a single premium life policy it might provide more initial tax free death benefit but if your complaining about taxes she would still have income and penalty tax plus cv would be less than initial deposit.

Thanks, I was thinking Roth so you confirmed it.

 

[moonlightandmargaritas]

She'll just pay the taxes now and have less to invest.

What if taxes are higher in the future?

 

[Brad Sewer]

too much scrutiny - stay away from people this age as it can end badly for so many reasons

 

[jboussea]

All great questions to ask. And the answers should come from a properly licensed financial professional - not an insurance agent. I'm out. Later.

a licensed financial planner is not the only one with common sense... do they teach that in the CFP course?

 

[Newby]

a licensed financial planner is not the only one with common sense... do they teach that in the CFP course?

This is an old thread. Crabcake Johnny failed out of the biz many years ago. In fact several of the advice givers in this thread did.

 

[Allen Trent]

This is an old thread. Crabcake Johnny failed out of the biz many years ago. In fact several of the advice givers in this thread did.

But they were very good to those 4 or 5 clients they found willing to pay them for their advice. never had to sacrifice their souls to the devil for collecting an evil commission or screw over consumers with those outrageous one time commissions

 

[Chazm]

It's over Johnny

 

[Robert Hall]

I would just ask your marketer at your IMO. They will be able to give you several options.