Comments on: Be A Sloth and Don’t ROTH – Why Converting To A ROTH Is A Mistake!

By: How Much Should People Have Saved In Their 401Ks At Different Ages | Financial Samurai

Sat, 14 Jan 2012 06:55:44 +0000

[...] The 401K is one of the most woefully light retirement instruments ever invented. The worst is the pathetic IRA which limits you to only $5,000 if you make under $58,000 a year for a traditional IRA to completely participate. Meanwhile, you have to make less than $110,000 a year for the privilege of contributing after tax dollars in a a Roth IRA. [...]

By: rothswork

rothswork — Wed, 26 Oct 2011 22:39:56 +0000

ok, a roth works for me because i took an early out pkge in 2009 and paid large tax bill. In 2010 and forward, i live on a decent pension, only 60 yrs old ==thus 2010 partial trfr from 401 to roth gets split taxed in 2011, 2012 at rates that are very low. in six years i get soc sec , drives me into next up bracket. i left some funds in 401. At 70, soc sec, pension plus spouse deferred pension drive me into higher bracket again, PLUS at 70 the MRD forces 401 withdrawal at my highest marginal rate. The roth has already been taxed at lower rates and should grow tax protected with no MRD at 70. thus the unique brackets i am managing give me the lowest tax cost position by using the roth conversion options. As for inheritance planning, my 401 gets hit as ordinary income but roth principle and all growth continues tax free to my heirs. thus a roth trfr can be beneficial but is dependent on each situation – and actually was very beneficial to a number of my friends who also found themselves with early exit payoffs and sizable 401 balances. At 70 i plan to do annual 401 to roth conversions equal to the inflation growth of the marginal tax bracket. Thus shifting possible ordinary income inheritance pool to tax free pass trhrough. Conclusion-> roths conversions can work very well.

By: Cash-Out Mortgage Refinancing As A Way To Lower Your Tax Bill | Financial Samurai

Thu, 15 Sep 2011 14:07:56 +0000

[...] that level of income and pay the same taxes! This is the argument why paying taxes now and doing a ROTH IRA is dumb. It’s better than not saving, but tax planning wise, it’s [...]

By: Are You A Financial Dumb Ass? | Financial Samurai

Are You A Financial Dumb Ass? | Financial Samurai — Sat, 23 Apr 2011 14:30:43 +0000

[...] many people decided to convert to a ROTH IRA in 2010. Can you believe that people voluntarily decided to pay taxes to a government whose [...]

By: Financial Samurai

Financial Samurai — Fri, 22 Apr 2011 22:15:51 +0000

That’s right. We will find a way to reduce our taxes. We can move, take deductions, do this and that. What we can’t do is pay our government MORE taxes so they can spend more on wasteful things. Ridiculous!

By: krantcents

krantcents — Fri, 22 Apr 2011 16:44:26 +0000

The threat is taxes will be higher! At least that is used in the Roth advertising! Your income may or may not be higher. My personal take on this is more pragmatic. It would cost me a ton of money to convert all my IRAs to a Roth! If my effective tax rate is higher in the future (retirement), I will find a way to reduce my taxes. One way is take less in withdrawals from my IRA. When I retire, I will have multiple streams of income such as Social Security (H & W), pension, IRA, Roth IRA, brokerage account and blog income.

By: Sunil from The Extra Money Blog

Sunil from The Extra Money Blog — Sun, 02 Jan 2011 06:46:14 +0000

i actually believe the Roth is a good investment tool while one is eligible for it. i do recognize the potential downsides to it as highlighted in the post. i.e. the government can change laws/rules on taxation to make it more/less favorable at any point. i have bought and sold a few properties from within my Roth (on leverage), thereby legally avoiding taxation on the gains. i know this is not a “common” use of the Roth vehicle, but it has worked well for me.
when i first started my Roth, I did it because I anticipated higher tax rates in the future, and retirement income near levels during the hay days. this post puts the tax situation in good perspective in that how much can income taxes go up after all? as far as income during retirement, i am not so much relying on a fixed income model from capital invested, but rather cash flow / income streams from various activities, some of which could be capital invested.

By: Financial Samurai

Financial Samurai — Sat, 18 Dec 2010 14:25:31 +0000

Ha! Nice. Glad you find the post logical. Frankly, it is so logical with this huge deficit we have!