Return to the Household Finances Forum | Post a Follow-Up

Suggestions for overlapping 401's

Posted by maifleur (My Page) on
Tue, Oct 26, 10 at 0:11

We are a couple of years away from the problem but wish to start looking as possibilities. Hubby is 5 years older than I am and for 5 years the mandatory withdrawals from our 401's will overlap. If it happened tomorrow most of the funds would be eaten by taxes any suggestions on how to limit the tax bite.

If I was to do it over I would have put as much money as I could in a Roth because the taxes we now pay are much more than what I would have paid paying taxes back then.

Follow-Up Postings:

RE: Suggestions for overlapping 401's

Tax deductable donations to your church or other qualifying organization.
You should be able to substitute the withdrawals for what you are now giving in cash. How best to do this depends on how your IRA(s) are invested.

RE: Suggestions for overlapping 401's

Have you actually done the calculations? Given today's tax rates, it doesn't seem possible that most of the funds you withdraw "would be eaten by taxes." In addition, you probably have the ability to convert some or all of the 401k accounts to Roth accounts by paying taxes now under the new tax rules, and giving yourself some flexibility in the future.

I suggest you talk with an accountant or financial planner before you do anything, particularly because what works best in one state is not necessarily what works best in another. If you are truly looking at large financial impacts, the best expenditure you can make is to pay a professional for advice rather than looking for people in this forum to throw out specific ideas based on the very limited info you provided.

RE: Suggestions for overlapping 401's

It has been years since we have taken anything other than the standard deduction so we donate because we want too not for any tax reason.

Since I have 7 more years before I start drawing if I just leave my 401 as it is with no increase the calculations estimate between $25 to $40K additional during that time period. I was hoping that someone that had a similar situation would provide information on how they handled it. I am more concerned about Federal Taxes rather than State. The only advice I have received from financial planners is for products that they push and suggestions to move to Roth. I definately agree on the Roth.

RE: Suggestions for overlapping 401's

If you can't find a financial planner who offers good advice without trying to sell you something, consult an accountant who does personal tax returns.

RE: Suggestions for overlapping 401's

You've left this until rather late - if you're going to do a Roth conversion, the favorable treatment of splitting the tax bill over two years is only applicable to a Roth set up this year (2010).

You can contact the Garrett Planning Network for an independent, fee only CFP who can advise you. But again, it takes time to interview 2 or 3 CFPs and then decide which one you want to work with, so your time frame is rather tight with the end of the year looming.

Or, as kudzu9 suggests, a personal referral to a good tax advisor might also work. No matter what you choose, I suggest you find someone ethical, reliable, and expert as soon as possible.

 o Post a Follow-Up

Please Note: Only registered members are able to post messages to this forum.

    If you are a member, please log in.

    If you aren't yet a member, join now!

Return to the Household Finances Forum

Information about Posting

  • You must be logged in to post a message. Once you are logged in, a posting window will appear at the bottom of the messages. If you are not a member, please register for an account.
  • Please review our Rules of Play before posting.
  • Posting is a two-step process. Once you have composed your message, you will be taken to the preview page. You will then have a chance to review your post, make changes and upload photos.
  • After posting your message, you may need to refresh the forum page in order to see it.
  • Before posting copyrighted material, please read about Copyright and Fair Use.
  • We have a strict no-advertising policy!
  • If you would like to practice posting or uploading photos, please visit our Test forum.
  • If you need assistance, please Contact Us and we will be happy to help.

Learn more about in-text links on this page here