Recent Topics
335i BMW Rear Bearing: DIY?
by antonmnster
07/18/18 10:39 PM
Noise on cold start
by Spetz
07/18/18 09:23 PM
FRAM TG4967 C&P
by JohnnyJohnson
07/18/18 09:10 PM
What is the longest you have had a car battery las
by wtd
07/18/18 09:00 PM
clicking noise front driver side
by tookien
07/18/18 08:57 PM
FRAM Ultra XG7317 at 10K miles cut open
by crazy_raccoon
07/18/18 08:45 PM
Amsoil SS 0w-30 1.4L Tur 2014 Chevy Cruz 20k OCI
by SubieBlue
07/18/18 08:42 PM
Unknown Found In Woodworking Estate Box
by Recalculating
07/18/18 07:57 PM
LM-100J (C-130) Airshow
by tom slick
07/18/18 07:47 PM
Eldora truck race tonight
by thooks
07/18/18 07:43 PM
Front wheel stud on a 2000 buick century
by JimmyJohns
07/18/18 07:41 PM
Ford 6.2 diesel
by buck91
07/18/18 07:34 PM
Weber gas grills & Weber 10 yr warranty
by Donald
07/18/18 05:50 PM
2008 Honda Odyssey oil and filter?
by CARJ
07/18/18 05:11 PM
Bugatti Veyron $21k oil change???
by wemay
07/18/18 05:07 PM
Nexen N Priz AH8 vs Hankook Ventus V2 Concept
by ET16
07/18/18 04:48 PM
1999 LeSabre to 2008 Lucerne
by Duffyjr
07/18/18 04:26 PM
Engine Oil "catch cans"
by TnMike46
07/18/18 04:17 PM
2018 Audi S4 4.5k mi Factory Fill
by Vigg
07/18/18 03:46 PM
RAGBRAI 2018
by DriveHard
07/18/18 03:23 PM
Newest Members
99SK04GTX, jasonjossens4231, Eneos1, tung, spacekiller67
65511 Registered Users
Who's Online
55 registered (antonmnster, AVB, Bandito440, aleneros, 87sammy, aquariuscsm, 2 invisible), 1193 Guests and 31 Spiders online.
Key: Admin, Global Mod, Mod
Forum Stats
65511 Members
67 Forums
287301 Topics
4792837 Posts

Max Online: 3590 @ 01/24/17 08:07 PM
Donate to BITOG
Topic Options
#4708972 - 03/27/18 09:26 PM Tax Season - so a Tax question
maverickfhs Offline


Registered: 12/28/16
Posts: 2076
Loc: VA
As the title suggests, have already changed things on my end and will be maxing out on 401K and HSA account contributions.

Looking for a roth IRA(or should I go for traditional?) option, is there anything else I can do for a sound financial choice while lowering taxes?

Thanks for all the advice and help thumbsup
_________________________
2006 Civic EX 202K/AT
2006 Acura TSX 180K/AT

Top
#4709008 - 03/27/18 09:45 PM Re: Tax Season - so a Tax question [Re: maverickfhs]
gathermewool Offline


Registered: 01/09/09
Posts: 6063
Only you know whether you think you'll draw more in retirement than you make now. No one knows what tax rates will be like.

Throw your dice and hope for the best. I minimize my tax burden now and hope that my spendy ways will subside in old age.

Top
#4709024 - 03/27/18 10:00 PM Re: Tax Season - so a Tax question [Re: gathermewool]
Nyquist Offline


Registered: 10/24/08
Posts: 967
Loc: Iowa
I'm going primarily with Roths right now in hopes that paying now pays off later.
_________________________
2015 Chevy Traverse 3.6L (LLT) Mobil 1 5w30 w/ Fram Ultra
2017 Chevy Cruze Hatchback 1.4L (LE2) Mobil 1 5w30 w/ Wix

Top
#4709025 - 03/27/18 10:00 PM Re: Tax Season - so a Tax question [Re: maverickfhs]
spk2000 Offline


Registered: 02/19/13
Posts: 998
Loc: Prospect, KY
I choose the other saying I can afford to pay the taxes now and put into Roth whenever I can. Then it will grow tax free and when i may not be able to work taxes will be less of a burden. Like he said above though you just don't know what the taxes will be like in retirement. They might be higher or they might be lower. Traditional IRA you will have to pay taxes on all the gains too. But you do have more in the account earning as well.

Decision not to be made lightly but there are some unknowns
_________________________
96 Grand Marquis
01 Sable LS
02 Montero

Top
#4709053 - 03/27/18 10:32 PM Re: Tax Season - so a Tax question [Re: maverickfhs]
otis24 Offline


Registered: 10/30/05
Posts: 1659
Loc: South Dakota
What do you do for a living? Is there something that you could purchase and use as a business expense? Some states let you write off lease payments 100%
_________________________
1991 Chevrolet K1500 (4.3, 4x4, 86k miles)

2016 Dodge Grand Caravan
(3.6 V6) 46500 miles

Top
#4709060 - 03/27/18 10:47 PM Re: Tax Season - so a Tax question [Re: maverickfhs]
Brybo86 Offline


Registered: 10/08/11
Posts: 2956
Loc: Chicago, IL
100% Roth over traditional.
Pay a 25% tax on 200k in contributions -Roth
Pay a 15% tax on 1 million+ in growth in 30 years-trad

Roth 50k in taxes vs trad 150k taxes

Also if you are maxing 401k/hsa/trad ira your RMD at age 85 is going to be mind-boggling like many hundred thousands of dollars.

I would do Roth, no RMD , ever.
Tax free GROWTH, which is going to be the vast majority of the accounts value
_________________________
08 Honda Accord EX-L 2.4L M1 EP 0w20 145k
01 Kymco People 50
95 Lexus LS400 M1 AFE 0w30 193k
95 Yamaha Jog

Top
#4709064 - 03/27/18 10:51 PM Re: Tax Season - so a Tax question [Re: maverickfhs]
nickaluch Offline


Registered: 10/04/08
Posts: 385
Loc: Long Island,nassau county NY
I'm in a little bit of a different situation. No 401k I own a small business. I pound money into mutual funds and Roth IRA.Hopefully selling my business after my youngest goes off to college.
_________________________
2007 G6 beater.2012 E450 box truck. 2018 Chevy Traverse.2017 E450 box truck.2017 Chevy 3500 extend cargo van.

Top
#4709119 - 03/28/18 12:57 AM Re: Tax Season - so a Tax question [Re: maverickfhs]
csandste Offline


Registered: 05/31/02
Posts: 1225
Loc: St. Peters, Missouri
I started working well before Roth's were available but switched as soon as they appeared. I had to transfer funds from a 457 plan that I maxed out and also got money from an employer buy out of my share of a retirement plan. My total Federal taxes the last year I worked was $14.8K, I've paid $27K+ for the last couple of years (I became widowed and also moved about $6K from regular to Roth to keep from REALLY getting hit in the future).

They always said you should shelter as much income as possible because you'll make less money in retirement. If you're as cheap as I've been on unnecessary spending that ain't necessarily so. Put as much in possible in a Roth and carefully consider putting extra funds above the match in a regular 401/403b/457 into a non-deferred account. Capitol gains are cheaper than getting bled out by delayed payments at regular income rates.




Edited by csandste (03/28/18 01:00 AM)
_________________________
2017 Kia Soul Plus-- Valvoline MaxLife Blend 5-20

Top
#4709165 - 03/28/18 05:29 AM Re: Tax Season - so a Tax question [Re: maverickfhs]
Donald Offline


Registered: 03/21/04
Posts: 20556
Loc: Upstate NY
Originally Posted By: maverickfhs
As the title suggests, have already changed things on my end and will be maxing out on 401K and HSA account contributions.

Looking for a roth IRA(or should I go for traditional?) option, is there anything else I can do for a sound financial choice while lowering taxes?

Thanks for all the advice and help thumbsup


A Roth will help with taxes in the future but not with taxes in 2018. Still there are some good reasons to consider one. While you add money after taxes, when you withdraw there are no taxes, so the interest you earn is tax free. There are some restrictions.
_________________________
2015 Subaru Forester 2.5 engine/CVT
2015 Ford F250 w/Powerstroke
2016 Subaru Crosstrek CVT (wife's)


Top
#4709338 - 03/28/18 09:00 AM Re: Tax Season - so a Tax question [Re: maverickfhs]
SVTCobra Offline


Registered: 12/11/09
Posts: 713
Loc: Battle Creek, MI
Originally Posted By: maverickfhs
As the title suggests, have already changed things on my end and will be maxing out on 401K and HSA account contributions.

Looking for a roth IRA(or should I go for traditional?) option, is there anything else I can do for a sound financial choice while lowering taxes?

Thanks for all the advice and help thumbsup


I would suggest a Roth IRA - when you say you maxed out your 401k are you talking pre-tax, post tax or Roth 401k? IRS allows up to $18.5k pre-tax and $55k total for 2018. So the difference would allow $37k in post tax/Roth investments.
_________________________
If marriage was outlawed only outlaws would have in-laws.

Top
#4709350 - 03/28/18 09:08 AM Re: Tax Season - so a Tax question [Re: Brybo86]
SVTCobra Offline


Registered: 12/11/09
Posts: 713
Loc: Battle Creek, MI
Originally Posted By: Brybo86
100% Roth over traditional.
Pay a 25% tax on 200k in contributions -Roth
Pay a 15% tax on 1 million+ in growth in 30 years-trad

Roth 50k in taxes vs trad 150k taxes

Also if you are maxing 401k/hsa/trad ira your RMD at age 85 is going to be mind-boggling like many hundred thousands of dollars.

I would do Roth, no RMD , ever.
Tax free GROWTH, which is going to be the vast majority of the accounts value


Not saying your incorrect but my math worked out differently. You will pay a lot more in taxes in retirement but the idea is that since you aren't paying taxes up front you can invest more, so assuming everything is equal then you will have more money to begin with. So yes you are paying more taxes at the end, but avoiding the taxes up front it all comes out in the wash.

What I found makes a huge difference is that a lot of people have their retirement planned out to only pull out so much per year so they aren't in a higher tax bracket. When something goes wrong (medical), you want to buy a house, start a business, etc. then large withdrawals puts you in a really high tax bracket negating some savings (a lot depending on withdrawal amount) by doing pre-tax to begin with.
_________________________
If marriage was outlawed only outlaws would have in-laws.

Top
#4709372 - 03/28/18 09:35 AM Re: Tax Season - so a Tax question [Re: SVTCobra]
maverickfhs Offline


Registered: 12/28/16
Posts: 2076
Loc: VA
Originally Posted By: SVTCobra
Originally Posted By: maverickfhs
As the title suggests, have already changed things on my end and will be maxing out on 401K and HSA account contributions.

Looking for a roth IRA(or should I go for traditional?) option, is there anything else I can do for a sound financial choice while lowering taxes?

Thanks for all the advice and help thumbsup


I would suggest a Roth IRA - when you say you maxed out your 401k are you talking pre-tax, post tax or Roth 401k? IRS allows up to $18.5k pre-tax and $55k total for 2018. So the difference would allow $37k in post tax/Roth investments.


Talking about Pre-Tax.
_________________________
2006 Civic EX 202K/AT
2006 Acura TSX 180K/AT

Top
#4709403 - 03/28/18 10:04 AM Re: Tax Season - so a Tax question [Re: Brybo86]
wallyuwl Online   content


Registered: 06/02/09
Posts: 1780
Loc: Wisconsin
Originally Posted By: Brybo86
100% Roth over traditional.
Pay a 25% tax on 200k in contributions -Roth
Pay a 15% tax on 1 million+ in growth in 30 years-trad

Roth 50k in taxes vs trad 150k taxes

Also if you are maxing 401k/hsa/trad ira your RMD at age 85 is going to be mind-boggling like many hundred thousands of dollars.

I would do Roth, no RMD , ever.
Tax free GROWTH, which is going to be the vast majority of the accounts value


It is for this reason why Roth is usually a better option than Traditional for most people. Also, with Roth you can take our your principal penalty free, where you can't do that with traditional. That said, if your company does a match for a 401k or 403b then those usually go into traditional IRA type accounts. In that case, put in whatever you can up to their match amount (never turn free money) and put any extra into the Roth.

Top
#4709474 - 03/28/18 11:10 AM Re: Tax Season - so a Tax question [Re: maverickfhs]
JohnnyJohnson Online   content


Registered: 10/22/09
Posts: 2894
Loc: Wet side WA
You should have probably been putting money in a ROTH for years too much money in retirement is not a bad thing. We've had ROTH's since what now 1990 something. The Government hasn't kept up with the times the Max ROTH contribution should be at least 12K a year now but the Government is to greedy to turn loose of that tax money. Social Security isn't going to be around for ever they keep robbing it and just giving it away. As for enough money in retirement I never touched my 401K until the Government made me take my forced distribution. I have never tapped my Roth but its there for a rainy day and building tax free.
_________________________
2004 Corolla 122537
Out: VML 5w-30 TG4967 117530 OCI 5007 Miles
In: Castrol EDGE EP 5W-30 Bosch 3311 7-18-18
2006 Duramax 74202
Out: T6 5W-40 M1-303
In: T6 5W-40 XG9100 74705 4-22-18

Top
#4710283 - 03/29/18 08:22 AM Re: Tax Season - so a Tax question [Re: SVTCobra]
Brybo86 Offline


Registered: 10/08/11
Posts: 2956
Loc: Chicago, IL
Originally Posted By: SVTCobra
Originally Posted By: Brybo86
100% Roth over traditional.
Pay a 25% tax on 200k in contributions -Roth
Pay a 15% tax on 1 million+ in growth in 30 years-trad

Roth 50k in taxes vs trad 150k taxes

Also if you are maxing 401k/hsa/trad ira your RMD at age 85 is going to be mind-boggling like many hundred thousands of dollars.

I would do Roth, no RMD , ever.
Tax free GROWTH, which is going to be the vast majority of the accounts value


Not saying your incorrect but my math worked out differently. You will pay a lot more in taxes in retirement but the idea is that since you aren't paying taxes up front you can invest more, so assuming everything is equal then you will have more money to begin with. So yes you are paying more taxes at the end, but avoiding the taxes up front it all comes out in the wash.

What I found makes a huge difference is that a lot of people have their retirement planned out to only pull out so much per year so they aren't in a higher tax bracket. When something goes wrong (medical), you want to buy a house, start a business, etc. then large withdrawals puts you in a really high tax bracket negating some savings (a lot depending on withdrawal amount) by doing pre-tax to begin with.

You would need to add a lot more to pre tax to equal Roth.
Basically 25%, or your tax rate.
Unless you actually do that investing in Roth is essentially like investing 25% more money
_________________________
08 Honda Accord EX-L 2.4L M1 EP 0w20 145k
01 Kymco People 50
95 Lexus LS400 M1 AFE 0w30 193k
95 Yamaha Jog

Top