rick81721
Lothar
Gonna rent. Don't want to be stuck going to the same place every year
How the hell are we supposed to retire?
- Thread starter Red Mosquito
- Start date
Gonna rent. Don't want to be stuck going to the same place every year
Thanks @thegock. With your long-term experience as a CFO, I'm glad to hear that I am on the right track regarding the utility of Vanguard Index funds.
Once @rick81721 has the lay of the land figured out, this ^^^ is happening first visit.
So i dug around a bit on the Roth vs Traditional IRA comparison - the idea being in a traditional IRA, the tax is deferred
while in a high bracket, and withdrawn at a lower tax bracket. but it is taxed as income. (NJ does not recognize traditional ira/401k contributions - you've already paid nj tax on the investment
and it does recognize tax free roth w/d)
so can you win at the game...
here is an explanation about marginal tax rates (which is what it is all about!): https://www.bogleheads.org/wiki/Traditional_versus_Roth
here is a calculator but i think they botched it.
http://www.bankrate.com/calculators/retirement/roth-traditional-ira-calculator.aspx
while in a high bracket, and withdrawn at a lower tax bracket. but it is taxed as income. (NJ does not recognize traditional ira/401k contributions - you've already paid nj tax on the investment
and it does recognize tax free roth w/d)
so can you win at the game...
here is an explanation about marginal tax rates (which is what it is all about!): https://www.bogleheads.org/wiki/Traditional_versus_Roth
here is a calculator but i think they botched it.
http://www.bankrate.com/calculators/retirement/roth-traditional-ira-calculator.aspx
If Trump can get the income tax reduced to 15 to 20%, then I am going to have to run some numbers and see if it makes more sense to pay the tax to covert my IRA funds to Roths, versus saving that money in 401(k) fund and then having to pay 40%+ income tax when I need to withdraw it in retirement when the Dems are back in control.
401k has the matchy-match tho - hard to turn down the bump.
they will probably change the roth rules too, so......
Your tax rate in retirement should be half that (if not lower) if you are planning correctly. Your tax rate normally lowers at retirement age because you should have a lot less ordinary income and a lot more passive income.
hotsauce
Well-Known Member
Sorry to hijack the retirement convo, but a tangentially related question: is there a good primer on the best 529 plan?
Looking to get one going for a future kiddo. My typical go-to would be just to open an account at Vanguard and pump everything into the S&P 500 index fund. It looks like their fees are higher than they should be. Any insight?
Looking to get one going for a future kiddo. My typical go-to would be just to open an account at Vanguard and pump everything into the S&P 500 index fund. It looks like their fees are higher than they should be. Any insight?
Check out Nevada's plans. They offer some decent options. Vanguard has the Nevada plans available as options.
Sorry for the double quote - here's an ok guide. Best advice? Talk to an advisor and see what's right for you.
https://www.forbes.com/sites/baldwin/2016/03/03/guide-to-the-best-529-plans/#74a0aecb323c
hotsauce
Well-Known Member
@clarkenstein, thanks. I'm plenty comfortable with the investment options, it's the tax advantage part that I'm struggling with. I'm a CPA by trade so if I'm struggling with this, the whole ball of wax is too complicated!
Totally agree - way too complicated, and my condolences on your occupation, I'm a CPA too.
I'm in Neveada plans for my kiddos. When I picked them Nevada had the best bets tax-wise for us Jersians. That may have changed because that was almost a decade ago.
you work in NYC, right? NY 529 contributions are deductible from NYS income tax.
hotsauce
Well-Known Member
Yes but I live in NJ so I effectively have zero (almost) NYS income tax liability. As I understand it (and how income tax rules generally work) it's based on where you live, not work.
rick81721
Lothar
I would check on that. When i was working (live and worked in NJ but our main office was in NYC) they told us if we spent more than 15 (i think, might be more) days in NYC we were subject to their tax.
hotsauce
Well-Known Member
@rick81721, I oversimplified a bit but if you work in NY and live in NJ, you receive an offset to NJ income tax for taxes paid in NY through an agreement between the states, so net it should be zero. In actuality you end up paying a slight penalty to live in one state and work in another.
You're describing splitting your time between two (or more locations). The correct thing to do is to report income earned while sitting in NY as NY sourced income and income from any other state as sourced from that state (I think this has been updated for telecommuting but I'm not sure).
NY is particularly strict with reporting of income earned in their borders. One of my projects as an intern at an accounting firm was going through an executive's calendar to count when and where his driver picked him up and drove him to as evidence against a NY state residency audit.
You're describing splitting your time between two (or more locations). The correct thing to do is to report income earned while sitting in NY as NY sourced income and income from any other state as sourced from that state (I think this has been updated for telecommuting but I'm not sure).
NY is particularly strict with reporting of income earned in their borders. One of my projects as an intern at an accounting firm was going through an executive's calendar to count when and where his driver picked him up and drove him to as evidence against a NY state residency audit.
NYS tax is a deduction(adjustment?) on the nj tax form for out-of-state tax paid??
the difference between using a 529 and sp500 fund (in a uniform whatever it is called account) is risk tolerance (besides tax advantage - but at the kid's tax rate, machs nichts).
the 529 had an indexed graduation date that moves out of stocks and into bonds to preserve capital as it gets closer to graduation.
same as retirement date index funds.