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This is a big concern of mine. Most of my money is in 401k type things that I will owe tax on.
The only strategy I can think of to minimize the taxes in retirement is to move to a state with no income tax. Anything else I can do?
This is a big concern of mine. Most of my money is in 401k type things that I will owe tax on.
The only strategy I can think of to minimize the taxes in retirement is to move to a state with no income tax. Anything else I can do?
Patrick saysThis is a big concern of mine. Most of my money is in 401k type things that I will owe tax on.
The only strategy I can think of to minimize the taxes in retirement is to move to a state with no income tax. Anything else I can do?
You may have already thought of this, but if you expect to have a high income retirement you may want to convert some of that 401k to Roth IRA.
This is a big concern of mine. Most of my money is in 401k type things that I will owe tax on.I agree this is a concern. This is the way I look at it...I'm going to make a lot more income now (vs retirement), which means I'd pay more in taxes now than in retirement so saving in pre-tax is good. During your earning years if you can pay off your house and have no debt, move to a low/no-tax state, and keep your retirement expenses low, you won't need to draw down as much from your 401k so your tax bracket should be much lower. Am I missing something?
The only strategy I can think of to minimize the taxes in retirement is to move to a state with no income tax. Anything else I can do?
I cashed out some early when they were still moderate amounts and I was switching jobs, but continued to invest with them
convert some of that 401k to Roth IRA
Anything else I can do?
mell saysI cashed out some early when they were still moderate amounts and I was switching jobs, but continued to invest with them
Why would you cash out and pay a penalty when you could have rolled them to an IRA?
@Patrick, I would recommend you project the value of your 401K out until retirement age then realize the government is going to be making you take out at least 5% every year. If that 5% number is greater then your income today you probably should cool it a little on the pre tax contributions and start making Roth contributions.
And the argument about future Roth taxes is bogus because if the government ever gets that desperate the taxes on your pre tax contributions are going to be insane.
This is a big concern of mine. Most of my money is in 401k type things that I will owe tax on.
The only strategy I can think of to minimize the taxes in retirement is to move to a state with no income tax. Anything else I can do?
You can live in CA and pay "0" income tax
REpro saysYou can live in CA and pay "0" income tax
Tell us how.
(Paying that money in mortgage interest instead is not an improvement, if that's what you're getting at. The money is still gone.)
The answer is: Depreciable business asset.
This is a big concern of mine. Most of my money is in 401k type things that I will owe tax on.
The only strategy I can think of to minimize the taxes in retirement is to move to a state with no income tax. Anything else I can do?
In the END you are DEAD MEAT.
- Households nearing retirement may forget that not all of their retirement resources belong to them, as they will need to pay some portion in taxes.
- The question is just how large the tax burden is for a typical retired household and for those at different income levels.
- Using the Health and Retirement Study, this study estimates the present discounted value of lifetime taxes at retirement to the present value of retirement income.
- While the results show that taxes for most households are negligible, the burden rises to 11 percent for the top quintile, 16 percent for the top 5 percent, and 23 percent for the top 1 percent.
- Because the HRS excludes many of the very wealthy, the reported average 401(k)/IRA holdings for the top 5 percent and 1 percent look quite similar to what many academics hold in their TIAA accounts.
https://crr.bc.edu/briefs/how-much-taxes-will-retirees-owe-on-their-retirement-income-2/