Description: Financial Commentary For The Average Joe
Over the years, I’ve focused on the bits of the tax code that a middle class tax filer might benefit from. The Roth Conversion (still a good tool) and the Recharacterization, which the tax code killed, among them. Another bit of the tax code allowed a beneficiary of a taxable IRA or 401(k) to take distributions over his/her own lifetime, ‘stretching’ the withdrawals over decades to both allow for growth over time and reduce each year’s tax burden. Consider, if I have one married child, and leave her $1M, wi
Those who support this approach claim that once I (and my wife) are gone, we don’t ‘need’ the money and it’s up for grabs by the government. Yet the same folk pushed to get the estate tax exemption to $11M+ per person. Under the guise of ‘saving the family farms’, as if this were truly their motive. Adding to the irony are multiple New York Times articles, first reporting that Fred Trump, aided by his children, moved large sums of wealth into their names over their lifetimes to avoid proper taxes and the 55
Keep in mind, the bill hasn’t passed yet, but if it does, start doing the math. If you have multiple children, the tax hit is reduced. You can reduce it further if you have grandchildren, as the rules for their forced withdrawals are more lenient. If this new law is passed, you can also used Roth conversions over the next decades to move a small amount each year and pay the tax at your rate in retirement. Adding say, $25-$40K each year to your taxable income might have a far lower tax than to add 20% of the