I can’t say I invented the Backdoor Roth but I was an early proponent of it. If you are not familiar with this concept, a Backdoor Roth means contributing to a non-deductible Traditional IRA before converting it to a Roth IRA. Before the move was ever possible for those who earn "too much," I prepared […]
Saver’s Credit Plays Hard to Get
Are you a saver? I bet you are. Did you know there’s a tax credit called Saver’s Credit that reduces your federal income tax if you save for retirement in an employer sponsored retirement plan (401k, 403b, etc.) or in an IRA? If you knew, did you ever receive it? I bet you didn’t. I […]
Medicare Doc Fix: An Interview with Austin Frakt
The Medicare "doc fix" is in the news again. I keep hearing if Congress doesn’t act, doctor’s fees for treating Medicare patients will be cut by 27% starting on January 1. This is a complete mystery to me. What’s this evil force that’s trying to cut doctor’s fees? Why can’t Congress make it stop since […]
Tax on Capital Gains While Receiving Social Security Benefits
I wrote about tax-free capital gains when you are in the 15% tax bracket or lower. I created this chart to make it clearer what I’m talking about (click on the chart for a larger size). Your gross income first goes toward the pre-tax deductions from your paychecks (401k, health care insurance premiums, flexible spending […]
Deduct-and-Convert: Save Hundreds in State Tax on Roth IRA
If you live in the right state and have the right income, you can save hundreds in state income tax when you contribute to a Roth IRA in a different way.
Social Security Penalizes Two-Earner Families
A two-earner family with the same income as a one-earner family receives lower Social Security benefits. The difference gets much larger when one spouse dies.
Pre-Tax Spending Accounts Are No Cure for Tax Increases
New York Times Your Money columnist Ron Lieber got into some hot waters with readers after he wrote his column A Tax Plan That Might Not Be So Painful. I guess that’s because he used Dodging the Proposed 2013 Tax Increase as the headline for his blog post. I feel really sorry for him. Ron […]
Taxes Will Go Up Does Not Mean Tax Rates Will Have to Go Up
Ever since I wrote The Case Against Roth 401(k), I have people telling me I’m out of my mind. They say taxes have to be higher in the future because of deficits, baby boomers retiring, higher health care costs, etc., etc. I don’t necessarily disagree that taxes will be higher in the future. After all, […]
In-Plan Roth Rollover: Practically Useless
A new law passed last year, Small Business Jobs Act of 2010, added a provision to allow participants in 401k or 403b plans to move their money from a traditional 401k or 403b account to a Roth 401k or 403b account within the same plan. This is called an “in-plan Roth rollover.” As a practical […]
Inherited IRA and Roth Conversion Pro-Rata Rule
An inherited IRA isn’t yours. It isn’t included in the pro-rata calculation unless you are the spouse of the deceased and you make the inherited IRA your own IRA.
Sell Your RSUs As Soon As They Vest
I heard in a casual conversation that some of my co-workers are holding their RSU shares after the shares are vested. They thought there are some tax advantages in holding the RSU shares. There is no tax advantage whatsoever in holding the RSUs after they vest. RSU stands for Restricted Stock Unit. It’s a form […]
1099 Requirement in Health Care Law Repealed
Small businesses can breathe a sigh of relief. The dreaded 1099 filing requirement added in last year’s health care law is repealed before it has a chance to take effect. Under the health care law, a business is required to issue a 1099 form to all vendors starting in 2012 if the business purchases $600 […]