retirement planning for tough client

[OldJack]

You guys are making me hungry, I think I'll have some rabbit food and drink some Barley green,

Careful what you say Jan or you will get a good scolding from Bees!

[Bees Knees]

You are clearly out of control and in drastic need of a mental adjustment.

You would not be the first to make that observation. My last boss called me a bad apple. Maybe I have been losing it. Maybe I should retire...do some charity work...maybe help little old ladies who are being force fed rabbit food by their stingy kids....or something along those lines....

[OldJack]

You would not be the first to make that observation. My last boss called me a bad apple. Maybe I have been losing it.

A good whippin is probably all you need to help you mend your ways.

[Holland]

Rabbit food can also refer to pellets and table scraps. As in a poor little old widow too poor to buy people food.

You are not only the bogus police, but also the rude police, the common term police, and the don't have a right to be sarcastic police. You got any other talents we don’t know about? Like maybe the thought police? Maybe the original poster thought the sarcasm was funny. Apparently you don't. Apparently you are also the judge of humor as well.

Shall I run all future sarcastic posts that may have been humorous by you before posting any more messages?

Oh please. Please take a few days off. Please take a break. Please consider that YOU have gone completely right off the deep end.

Christopher Mewhort, EA, CGA

[Matt Sova]

Speaking of rabbit food

We were out to dinner with some friends and the waitress asked if I wanted a salad with dinner to which I replied "If you can't kill it with a gun then I am not eating it".

[myalias]

I logged back on

I was surprised to see two pages. I posted a question and I got two pages of responses!!! But not exactly what i expected.

For the record, rabbit food was a reference to lettuce and carrots-- why my mom will live longer than than me. Long life expectancy is relevant to my question. In other areas where pet rabbits are more common I can see this meaning something different.

Another point, I read Bees Knee's response to my Mother and she laughed hysterically. So please don't get too serious on our account. Certainly not the rudest thing anyone has said to me.

I'm a member of other forums (non tax related) and have been asked to moderate them. So i fully appreciate the humor and the debate on this post. (the potential moderator job is also part of the reason for my alias having an alias) I will most certainly come back and post.

[Bees Knees]

Welcome to the board myalias. I look forward to more posts from you. Don't worry about OldJack and myself getting too serious on your account. We argue all the time. He is still sore over the last argument I won with him.

[myalias]

Lol!!!

LOL!!! lol

[myalias]

Another thing

Those numbers up there were estimates. I see now the actual numbers are signficantly different.

[Unregistered]

Why don't you register, but not use your real name. Do you think my mom really named me Bees?

Yes. I did think your last name was a little strange.

[Unregistered tax preparer]

Update on Mom's Roth

I adjusted my projections with more current information.

Updated figures
My mom wanted to convert 20,000 from traditional IRA to a Roth. Which would cause her to Federal liability to go up from 161 dollars to 5,096. Converting 10,000 would bump her tax from 161 to 1,936.

I looked at my mom's investments, expenses, traditional IRA balance and estimated minium distributions. It's likely that my mom's IRA will be growing instead of shrinking while in her early 70s-- and possibly much longer. A 10,000 conversion when 65 years old would most probably benefit her. Maybe even a bigger conversion.


BeesKnees,
I'm already registered I just did not feel like telling everyone my mom's info-- so i logged out. (and it wasn't i who made the above post.)

[Snaggletooth]

Boogey Man

Good grief guys! May the webmaster god please flush you down the commode!

Bogus post? Who knows? It definitely had possibilities. If this guy is a tax preparer, he would know that the taxation of an IRA rollover into a Roth is identical to the taxation of a distribution. And the tax determination of various options IS just a simple matter of doing the math.

Rollovers into a Roth are not for the elderly. They have to pay the tax anyway, and the only benefit (which is not assured) is the future exemption of interest/dividends. A broker did this exact thing to one of my customers, ages 68 and 67.

The tax savings on all the dividends/interest since then has not equalled the tax paid when the rollover was recharacterized.

Bogus post? I won't judge. But the guy is either planting a question or needs to brush up on his math.

[Unregistered tax preparer]

legitmate tax planning vs. bogus planning

Snaggle,

Thank you for sharing your experience with this type of situation. Having the elderly rollover monies in to their Roth is certainly not standard practice. (Apparently someone thought my Mom should do it even against an accountant's advice.) I've found very little guidance on it. This situation you described of tax savings not equaling the tax paid is exactly what i wish to avoid.

...And the tax determination of various options IS just a simple matter of doing the math.

I agree that figuring out the immediate tax effect of a rollover in to a Roth IRA is simple. Just putting some numbers in the computer (using the completed 2005 return as a projection). But estimating the future tax liability on the funds that remain in a traditional IRA is not simple. Therefore comparing immediate cost to the present value of long term benefits is involved (It's certainly not something that i normally do).

Rollovers into a Roth are not for the elderly.

That's often true but not always true. The situation I see is a woman's investments growing without her having to cash them out. Her taxable income will start climbing even more in five years when she's required to take minimum distributions from her IRA. It's almost certain that her tax bracket in 2006 will be significantly lower than 2012, 2013, etc.

I'm thinking that the tax savings achieved by putting 10,000 in a Roth today will likely exceed the estimated $1,775 increase in tax liability. Maybe my guestimation of 10,000 is not the ideal number. But some amount of Roth conversion is good tax planning for this 65 year old woman.

thanks for reading

[Sincere apologies for arousing suspicions--unintentional)

[ChEAr$]

Defer

taxes until the latest possible moment is our old maxim. 20,000 causing a tax jump of
more than 4800$ is just too much in my opinion.

one opportunity exists for taxpayers less than filing requirements to move just enough into a ROTH but keep below filing requirements. But where I am, the state threshold is SO low,
that even this advice fails some times.

But keep it in mind.

Holiday ChEAr$,
Harlan Lunsford, EA n LA

[Black Bart]

I feel the same way about my clients.

You are clearly out of control and in drastic need of a mental adjustment.

There's just no doubt that those who don't share my tax theories, political views, social attitudes, variable values, keep guns in the house, eat veggies instead of salt and lard, etc., etc., etc. are definitely "mental cases."

Say Jack - at the risk of incurring the wrath of Sova for opposing "smart" guys' "smart" remarks; do you think the above quote might be a little "over the top?"