Friday Reading: Convert to Roth Or Realize Capital Gains

By Harry Sit

Articles of Interest

End of Year Roth Conversion Strategy: Fill Up the Bracket from Jim Blankenship at Getting Your Financial Ducks In A Row

If you are in a low tax bracket, should you fill up the bracket by converting traditional IRA or 401k to Roth, or should you take advantage of the special 0%  capital gains tax in 2011? It depends on whether you are in a low tax bracket only temporarily or you will be in a low tax bracket for years to come.

If it’s only temporary, I would go with converting to Roth. If you will be in a low tax bracket for the foreseeable future, I would go with realizing long-term capital gains and resetting the cost basis.

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10 Errors to Avoid When Refinancing from The White Coat Investor

Mortgage rates are low again. If you haven’t refinanced recently, check the rates. Remember to use stepping down the ladder with a no-cost loan. I wrote a whole series about how to refinance a mortgage earlier this year. Also be sure to avoid the 10 errors mentioned in the article above.

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A Week in India: An Education … from Darwin’s Money

Darwin reported what he saw from his recent work-related stay in India. This observation said it the best:

"With millions of these English-speaking kids graduating with technical degrees each year, it’s tough to imagine competition in the global economy won’t continue to be increasingly difficult for our children."

That’s exactly right. Crying about being worse off than the parent generation won’t help. Compete.

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2012 vs 2011 Savers Tax Credit To Offset IRA and 401(k) Retirement Plan Contributions from Saving to Invest

The Saver’s Credit is one of the most elusive tax credits. I bet you don’t qualify. Those who qualify are usually not what the credit was intended for. I will write more about this later.

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Is There A Minimum Below Which Financial Planning Advice Isn’t Relevant? from Michael Kitces at Nerd’s Eye View

No there isn’t a minimum if financial planning is interpreted broadly as help on money management, but there is a minimum below which clients can’t afford to pay what a typical financial planner wants for one-on-one advice. As a result, that field is left to non-profits, ad-supported media (including blogs), and gurus like Suze Orman and Dave Ramsey.

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Gift Card Advice: 802 Reasons Why Cash is a More Thoughtful Gift from Len Penzo dot Com

Len found unused gift cards with a total face value of $802 in his house. They are sure not worth $802. What a waste! Somebody should really come up with a cash based gift card. No I’m not talking about prepaid debit cards. This card should put money directly in someone’s bank account.

Oh, wait, it’s called a check. We just need some nice paper with decorative themes. Banks and credit unions should sell these.

Blog of the Week

Darwin’s Money

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Posted on December 23, 2011 under News. Keywords: .

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Comments

2 Comments on Friday Reading: Convert to Roth Or Realize Capital Gains

  1. B on December 24, 2011
     

    Regarding the saver’s credit — I’m not sure how someone who makes less than $17,000 a year is supposed to save $2,000 of it if they are really single and on their own — but my family did take advantage of it last year. My step daughter was a recent college graduate underemployed and working at the mall after re-locating to a different state to live with her boyfriend. I read about this Saver’s Credit in the newspaper. Her income in 2010 was that low, so her father and I gave her $2,000 to put in her Roth IRA. She claimed the credit and got an extra $1,000 back on her tax return. She got a “real job” in January, so we won’t be able to take advantage of it again this year.

  2. dd on December 25, 2011
     

    “Regarding the saver’s credit — I’m not sure how someone who makes less than $17,000 a year is supposed to save $2,000 of it if they are really single and on their own” I agree! I have to believe that our legislatures were drunk when they did this. The situation you describe is one of the few ways (kudos to you) to take advantage of the situation and that means one has to give someone the money for the IRA.
    We also tried to take advantage of this a while ago, but could not, as the son was still being counted as a dependent.

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