Yesterday's wonderful posting by Bogdan Sheremeta indicated that the contributions would not be tax deductible and yes, the withdrawals would be fully taxable at regular income tax rates.Takes a bit of the sweetness out of it.
Truly a very informative posting. Thank you for going through the work required to create this. Two items: 1) I didn't see a mention of the new QCD reporting requirement (on the 1099-R) for custodians and 2) change "points" to "pounds".
There seems to be a lot of confusion about the new senior bonus deduction. The new senior bonus deduction is a "below-the-line" deduction so has nothing to do with the taxability of SS benefits. Taxability of SS benefits are determined by "above-the-line" income, deductions and exclusions. "The line" is the AGI or MAGI line on the 1040.
My father was a business professor whose specialty was accounting. He refused to ever use a computer and required his students to buy a Boorum & Pease "Columnar Pad", 17" x 14". These were the paper spreadsheets of the day. I retained two of them from his estate. Perish the thought that I would ever use one!
Just do pure Roth conversions in December each year when you have a good handle on your tax situation for the year. Rule of thumb: convert to the top of your 12% tax bracket for sure and perhaps higher after you've shown higher will work for you. You don't need specialized "assistance" to do this. For the truly enamored who can afford the tax hit now, convert to the top of the 22% bracket or perhaps even higher if one is very well heeled. Two benefits - 1) reducing the size of the tIRA and 2) good growth of the Roth account assets.
Many states have filial support laws in place. Few enforce them to any extent...yet. A friend from college says that she had children specifically so they would take care of her in her old age. A real charmer, eh?
To emphasize and expand on what Norman Retzke said below, when asked I advise young folks to look for vocations that people cannot live without...and do those.
Comments
Yesterday's wonderful posting by Bogdan Sheremeta indicated that the contributions would not be tax deductible and yes, the withdrawals would be fully taxable at regular income tax rates. Takes a bit of the sweetness out of it.
Post: Trump Accounts
Link to comment from August 17, 2025
Truly a very informative posting. Thank you for going through the work required to create this. Two items: 1) I didn't see a mention of the new QCD reporting requirement (on the 1099-R) for custodians and 2) change "points" to "pounds".
Post: One Big Beautiful Act: Tax Breakdown and Planning Strategies
Link to comment from August 16, 2025
There seems to be a lot of confusion about the new senior bonus deduction. The new senior bonus deduction is a "below-the-line" deduction so has nothing to do with the taxability of SS benefits. Taxability of SS benefits are determined by "above-the-line" income, deductions and exclusions. "The line" is the AGI or MAGI line on the 1040.
Post: Free Social Security Taxability Calculator
Link to comment from August 15, 2025
"... whereas a commercial annuity would have no such protection." Don't most states have a Fund set up to backstop commercial annuities?
Post: Outliving Your Money? Let’s Do the Math on Annuities
Link to comment from August 14, 2025
My father was a business professor whose specialty was accounting. He refused to ever use a computer and required his students to buy a Boorum & Pease "Columnar Pad", 17" x 14". These were the paper spreadsheets of the day. I retained two of them from his estate. Perish the thought that I would ever use one!
Post: The spreadsheet conundrum when the stakes are high.
Link to comment from August 12, 2025
This is truly an excellent approach! Thank you.
Post: How I Use a Simple Analogy to Teach Investing
Link to comment from August 4, 2025
Just do pure Roth conversions in December each year when you have a good handle on your tax situation for the year. Rule of thumb: convert to the top of your 12% tax bracket for sure and perhaps higher after you've shown higher will work for you. You don't need specialized "assistance" to do this. For the truly enamored who can afford the tax hit now, convert to the top of the 22% bracket or perhaps even higher if one is very well heeled. Two benefits - 1) reducing the size of the tIRA and 2) good growth of the Roth account assets.
Post: ROTH Conversions and Fixed Index Annuities
Link to comment from August 3, 2025
"What should we do to make sure our children do not have to sacrifice so much when we need help due to our deteriorating health?" Final Exit?
Post: How to minimize the caregiving burden on our adult children when we need help?
Link to comment from August 3, 2025
Many states have filial support laws in place. Few enforce them to any extent...yet. A friend from college says that she had children specifically so they would take care of her in her old age. A real charmer, eh?
Post: Family Dynamics, Part 3: What Do Adult Children Owe Their Aging Parents?
Link to comment from July 30, 2025
To emphasize and expand on what Norman Retzke said below, when asked I advise young folks to look for vocations that people cannot live without...and do those.
Post: Raising Dough
Link to comment from July 27, 2025