The three major reasons why we suggested what we did for you:
1. If you spend from an IRA instead of Taxable, you might not have to sell anything and pay LTCG. Since you will get a step-up on the taxable accounts at death, why pay unnecessary taxes on capital gains?
2. Using the Rule of 72, your $3M tax-deferred accounts could easily double in 7 or 8 years if you don't withdraw anything now and when RMDs start at 75, the value might be $8M giving you a RMD of $320K. RMDs can't be converted, but they can be given to charities using QCDs. The sooner you start converting and convert extra during the early years, you may have a chance to keep future RMDs in check. It would also help to stop making new contributions now, if that is happening. You need to withdraw/ convert more each year than the tax-deferred annual growth or it will keep growing. Try converting to the top of the 24% tax bracket.
3. When one of you dies, the survivor will still need to withdraw/ convert about the same amount as if you were both living. But the space in the tax brackets for Singles is half as much compared to MFJ. That can easily push the survivor up to a higher tax bracket.
1. If you spend from an IRA instead of Taxable, you might not have to sell anything and pay LTCG. Since you will get a step-up on the taxable accounts at death, why pay unnecessary taxes on capital gains?
2. Using the Rule of 72, your $3M tax-deferred accounts could easily double in 7 or 8 years if you don't withdraw anything now and when RMDs start at 75, the value might be $8M giving you a RMD of $320K. RMDs can't be converted, but they can be given to charities using QCDs. The sooner you start converting and convert extra during the early years, you may have a chance to keep future RMDs in check. It would also help to stop making new contributions now, if that is happening. You need to withdraw/ convert more each year than the tax-deferred annual growth or it will keep growing. Try converting to the top of the 24% tax bracket.
3. When one of you dies, the survivor will still need to withdraw/ convert about the same amount as if you were both living. But the space in the tax brackets for Singles is half as much compared to MFJ. That can easily push the survivor up to a higher tax bracket.
Statistics: Posted by celia — Sun Jun 30, 2024 12:24 am — Replies 10 — Views 1324