- Thread starter
- #21
- 7,236
when you get to 5K posts, you can add that to your claim for missing 5K club benefits! (Don't hold your breath waiting for income though)
Thread now a bit of: can you make Roth IRA contributions without a job, Inherited IRA RMD's, and Flexible Premium FIA's
- Thread starter LostDollar
- Start date
- 10,968
All of you are a bit of a blowhard in this thread.
The guy said he expects to be able to contribute.
Perhaps its a part time job.... which many retirees have....
Or maybe its a ROTH CONVERSION.... which does not require any income to move funds into a ROTH.
I realize a conversion is not a "contribution" by technical definition. But to a consumer, its the same thing.
The guy said he expects to be able to contribute.
Perhaps its a part time job.... which many retirees have....
Or maybe its a ROTH CONVERSION.... which does not require any income to move funds into a ROTH.
I realize a conversion is not a "contribution" by technical definition. But to a consumer, its the same thing.
- 5,238
I resemble that comment.
Now, I want to ask if you are now a blowhard? You shared your opinion but didnt answer the question---but then again, I dont even remember what the question was now that it has been redacted like it is the Epstein flight log
Honestly thought I was being helpful as I have seem a lot of people make "contributions" they couldnt legally make, so that is why I asked.
- Thread starter
- #24
- 7,236
You have benefited me with tax advice over the last few years.
At the same time, I am the guy with whom you have argued about not taking RMD's from an inherited IRA when the IRS was waiving the requirement.
And that has worked quite well for me. I have been able to fill my tax brackets with Roth conversions and make a couple of annuity purchases I would not otherwise have been able to make. My 2024 tax hit is going to be somewhat pricey compared to what we are used to.
This year we are going to start those RMD's and, from my point of view, we are making up for lost time in relation to your concerns about a large tax hit in year 10-- my wife is going to follow the custodian's amount recommendations rather than the "minimum amount" procedure Ed Slott's site suggests is allowed for the first 9 years of RMD's.
- Thread starter
- #25
- 7,236
I have been a bit snotty about this because I have been quite angry about my thread getting redirected from my original question.
I will give you the same comment I gave anon, please read the rules for IRA contributions in IRS Pub 590A, carefully. That should show you precisely what I have been doing.
- 5,238
Using combat hazard pay or alimony to make allowable contributions?
- 5,238
Wasn't arguing with you. Just warning people as to how most taxpayers are impacted to make sure they consider all aspects. In every day life, most people not all, that inherit IRAs, should try to take equal annual distributions over the 10 years. I have seen way to many taxpayers elect 5 year deferral on NQ inherited or 10 yr on Qualified & take no annual distributions & end up still having a lump sum taxable distribution at the end, thus they missed out on getting some in the 0% or 10% or 15% bracket each year.
However, there are more limited times when someone knows they are currently in a higher tax bracket but will be lower in a few years. Many times that is people still working & retiring soon or people at the end of receiving payments for sale of business or property.
Basically each situation is different, but most retirees don't benefit from delaying receipt of RMDs. The IRS has basically said this over the last 25 years as they figured out most seniors are in the 0% or low tax bracket. In the late 1990s, you had to take RMDs at age 70 & it started at 6% & increased each year until you would empty it at 86. Fast forward to today & RMD don't start until 73 -75 & start at 3.5% very slowly increase & don't end even after age 100. They did because they realized they weren't collecting income taxes from most seniors. Slowing down, delaying RMDs leaves more money compounding to eventually be paid as a death claim in either a lump sum or max of 10 years to people still working & in higher tax brackets.
So, I am normally merely warning people to do their own tax bracket math because the IRS has a plan that is better for them.
You are in a very small % of people that can do this math & you do a great job. That is extremely rare though & most CPAs don't pro actively advise people each year how much to take out, so most wait til they have to take it & take as little as possible. In some cases, they are missing put on getting $25k each year put at 0% tax bracket that their standard deduction would wipe away
- Thread starter
- #28
- 7,236
Ok, I thought I had seen a section that very clearly spelled out what I wanted you to see. I just looked again and can't find it. What I previously saw was either not in an IRS pub, was in 1040 instructions, was in an HR Block comments, or -- I don't know where-- my apologies.
Who Can Open a TraditionalIRA?
Both spouses have compensation.
If both you andyour spouse have compensation, each of you can open anIRA. You can't both participate in the same IRA. If you file a joint return, only one of you needs to have compensation.
Page 6
And this:
What Is a Spousal IRA? Definition, How It Works, and Contributions
A spousal IRA is a strategy that allows a working spouse to contribute to an IRA in the name of a non-working spouse to circumvent income requirements.
www.investopedia.com
I learned about this in 2020. I could not use it then, but I was able to use it in some later years due to tax law changes and life circumstance changes.
While my wife was not working, I wanted ways to reduce taxable income to maximize ACA health insurance refund on the tax return.
Traditional IRA contributions would have been a way to do this, IF I had income to do it and tax laws would have allowed it and if I HAD earned income OR HAD tax ACCESS to earned income.
If we could find cash, I could do traditional ira and HSA contributions for wife, but that was it.
In 2020, tax rules changed and I (old fart) was allowed to make IRA contributions. In 2020 life circumstances changed my cash flow a bit. Sometime after 2020, my wife got a job earned salary income. I then started watching her pay stubs and w2's and figuring out how we were going to split IRA contributions up to the limit of her income.
I got a couple of good years of ACA refunds. Then, in part because of all your comments about taxes, I started looking at the longer view. Instead of minimizing current taxable income, I now needed some way to reduce future taxable income. I still had the extra cash flows. So I started a process of converting our "traditional tax base" retirement assets to "Roth" retirement assets, paying the tax hit from funds outside the "traditional tax base" retirement account balances.
I also finally convinced myself (from a lot of posts/threads here and materials from "Stan") that an FIA income rider product would be a wise purchase. So I focused on converting my accounts to Roth first because I was eliminating RMD's I had to pay and accumulating money for an annuity purchase. (I was ultimately able to combine your concerns about diversification of the income rider carriers and @bill3173 's concern about $50K being a minimum purchase to respect or attract an agent by purchasing 2 products.)
As a corollary to that, I have continued our IRA purchases to the extent possible, but am now try to have us do them as Roth. These Roth processes are the only thing I have been able to think of to help reduce the "Widow tax" situation my wife will face on my death.
This is also why I haven't wanted to have the RMDs on the post 2019 inherited IRA coming in if I didn't have to. You have made it very clear that we will have a tax bill on that coming due at some point. However I was also faced with the dual situation of I am getting too old to buy some FIA income rider products and when surrender charge periods would start and maybe starting points for holding periods for LPA increases. I wanted to get all my Roth conversions done on the front end of "everything to do" and leave my wife's inherited ira RMD's and roth conversions for last. It's possible I may have actually paid more taxes that way, but I have those annuities in place and am one step closer to having my side of joint finances on automatic at the time of my death.
Anyway, spousal IRA. It's not my money, but I have access to it for IRA contributions, IF (and only if) we do a joint return.
- 5,238
Excelllent-- that makes more sense now. I got sidetracked when you said you didnt have W2 or earned income & didnt mention Spousal IRA. Definitely can make Traditional or Roth contributions up to your household earned income from W2 or self employmentOk, I thought I had seen a section that very clearly spelled out what I wanted you to see. I just looked again and can't find it. What I previously saw was either not in an IRS pub, was in 1040 instructions, was in an HR Block comments, or -- I don't know where-- my apologies.
Who Can Open a TraditionalIRA?
Both spouses have compensation.
If both you andyour spouse have compensation, each of you can open anIRA. You can't both participate in the same IRA. If you file a joint return, only one of you needs to have compensation.
Page 6
And this:
What Is a Spousal IRA? Definition, How It Works, and Contributions
A spousal IRA is a strategy that allows a working spouse to contribute to an IRA in the name of a non-working spouse to circumvent income requirements.www.investopedia.com
I learned about this in 2020. I could not use it then, but I was able to use it in some later years due to tax law changes and life circumstance changes.
While my wife was not working, I wanted ways to reduce taxable income to maximize ACA health insurance refund on the tax return.
Traditional IRA contributions would have been a way to do this, IF I had income to do it and tax laws would have allowed it and if I HAD earned income OR HAD tax ACCESS to earned income.
If we could find cash, I could do traditional ira and HSA contributions for wife, but that was it.
In 2020, tax rules changed and I (old fart) was allowed to make IRA contributions. In 2020 life circumstances changed my cash flow a bit. Sometime after 2020, my wife got a job earned salary income. I then started watching her pay stubs and w2's and figuring out how we were going to split IRA contributions up to the limit of her income.
I got a couple of good years of ACA refunds. Then, in part because of all your comments about taxes, I started looking at the longer view. Instead of minimizing current taxable income, I now needed some way to reduce future taxable income. I still had the extra cash flows. So I started a process of converting our "traditional tax base" retirement assets to "Roth" retirement assets, paying the tax hit from funds outside the "traditional tax base" retirement account balances.
I also finally convinced myself (from a lot of posts/threads here and materials from "Stan") that an FIA income rider product would be a wise purchase. So I focused on converting my accounts to Roth first because I was eliminating RMD's I had to pay and accumulating money for an annuity purchase. (I was ultimately able to combine your concerns about diversification of the income rider carriers and @bill3173 's concern about $50K being a minimum purchase to respect or attract an agent by purchasing 2 products.)
As a corollary to that, I have continued our IRA purchases to the extent possible, but am now try to have us do them as Roth. These Roth processes are the only thing I have been able to think of to help reduce the "Widow tax" situation my wife will face on my death.
This is also why I haven't wanted to have the RMDs on the post 2019 inherited IRA coming in if I didn't have to. You have made it very clear that we will have a tax bill on that coming due at some point. However I was also faced with the dual situation of I am getting too old to buy some FIA income rider products and when surrender charge periods would start and maybe starting points for holding periods for LPA increases. I wanted to get all my Roth conversions done on the front end of "everything to do" and leave my wife's inherited ira RMD's and roth conversions for last. It's possible I may have actually paid more taxes that way, but I have those annuities in place and am one step closer to having my side of joint finances on automatic at the time of my death.
Anyway, spousal IRA. It's not my money, but I have access to it for IRA contributions, IF (and only if) we do a joint return.
Sounds like good plan if you can find the product you are looking for that will accept ongoing contributions in the product design you are looking for. If not, can always utilize a bank CD ROTH IRA if you cant find a suitable annuity IRA that matches what you are looking for.
