IRS 401k bombshell, now what?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Roth is just a wealth transfer tool for high income/high net worth families. Most people maximizing Roth have no plans to use the Roth money in their lifetime.

haven’t the rules. hanged on that?

Yep, 10 years post death and the inherited roth has to be emptied out

[Anonymous]

Anonymous wrote:Just calm down everyone. This is not a big deal. The bulk of your contributions will remain pre-tax, just the catch-up portion will be after tax in ROTH. For each individual, it will be a neglectable increase in taxes, but for the country as a whole, this will results in more tax revenue coming in today (rather than down the road).

Who are you, some IRS spokesperson?

[Anonymous]

Anonymous wrote:Just calm down everyone. This is not a big deal. The bulk of your contributions will remain pre-tax, just the catch-up portion will be after tax in ROTH. For each individual, it will be a neglectable increase in taxes, but for the country as a whole, this will results in more tax revenue coming in today (rather than down the road).

It's not just a tax concern. Today we can put in 7,500 additional and pay no tax on that today to max out. In the future, we will need to put in 12-13k to net 7,500 after taxes. So that's increasing the contribution by about 50% to have the same amount of principal earning returns. Your tax rate may vary.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Just calm down everyone. This is not a big deal. The bulk of your contributions will remain pre-tax, just the catch-up portion will be after tax in ROTH. For each individual, it will be a neglectable increase in taxes, but for the country as a whole, this will results in more tax revenue coming in today (rather than down the road).

It's not just a tax concern. Today we can put in 7,500 additional and pay no tax on that today to max out. In the future, we will need to put in 12-13k to net 7,500 after taxes. So that's increasing the contribution by about 50% to have the same amount of principal earning returns. Your tax rate may vary.

This

[Anonymous]

Anonymous wrote:Roth is just a wealth transfer tool for high income/high net worth families. Most people maximizing Roth have no plans to use the Roth money in their lifetime.

^^^^this- our financial planner has us converting to Roths for this reason!!!!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Sounds like a revenue raiser to me. Make people pay tax at the highest rates of their peak earning years.

They should shut down Roths though. Terrible tax policy. But those are generally most beneficial for those who save in them when young, when their marginal rates are lower.

Few people have marginal rates higher in retirement than their peak earning years. I doubt this is beneficial to most.

Aren't you prohibited from contributing to Roths once your taxable income crosses over 200,000 or something?

Or is it different for each spouse?

Like spouse 1 makes 250,000 can't contribute, but spouse 2 makes 70,000 so they can still contribute?

No income limit for back door Roth

And I think it’s for a Roth 401k

[Anonymous]

Anonymous wrote:Just calm down everyone. This is not a big deal. The bulk of your contributions will remain pre-tax, just the catch-up portion will be after tax in ROTH. For each individual, it will be a neglectable increase in taxes, but for the country as a whole, this will results in more tax revenue coming in today (rather than down the road).

Yes, it is a big deal. It will result in higher taxes for our family as we are getting ready to send our kids to college. Add on the crazy inflation and hit to existing U.S manufacturing and the Trump administration has been a financial disaster.

[Anonymous]

This is the first I've heard of this.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Just calm down everyone. This is not a big deal. The bulk of your contributions will remain pre-tax, just the catch-up portion will be after tax in ROTH. For each individual, it will be a neglectable increase in taxes, but for the country as a whole, this will results in more tax revenue coming in today (rather than down the road).

It's not just a tax concern. Today we can put in 7,500 additional and pay no tax on that today to max out. In the future, we will need to put in 12-13k to net 7,500 after taxes. So that's increasing the contribution by about 50% to have the same amount of principal earning returns. Your tax rate may vary.

If this is your level of understanding, you really ought to be paying someone else to make your financial decisions for you. The taxes are a wash if you are at the same tax rate, so the crux of the question is whether you expect to be paying the same tax rate when you withdraw. Many can predict whether they will be in a lower tax bracket in retirement but with speculation that eventually tax rates may jump due to the national debt, it’s anyone’s guess whether the lower tax bracket will have a rate that’s lower than you pay now.

[Anonymous]

My bigger concern is the Super Catch Ups. As you know this year (one year only) can put an extra $11,250 in 401K pre-tax if 60-63 which is a great deal. You are still peak earning years if work and just about to retire into lower earnings years for most.

next year that will be a ROTH only post tax super catch up. if you are already maxing out 401k doing that extra $11,250 will be a big hit to paycheck post tax unless a very high earner. And if a very high earner and plan to retire at 65 it loses a lot of benefit.

I peronally think thge ROTH catch might be better in the catch up for everyone 50-59. They got time. But people 60-67 doing a Roth after tax with stocks at all time highs and such a short window to retirement might not be a good deal at all.

[Anonymous]

Anonymous wrote:So I’m I over 50 and have been doing makeup contributions but now that’s not going to happen anymore and I need to
Put that money in ROTH? Can someone explain this more?

where did you get this from? catch up contributions cannot be made starting when?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Just calm down everyone. This is not a big deal. The bulk of your contributions will remain pre-tax, just the catch-up portion will be after tax in ROTH. For each individual, it will be a neglectable increase in taxes, but for the country as a whole, this will results in more tax revenue coming in today (rather than down the road).

Who are you, some IRS spokesperson?

No this is Karen on her soapbox

[Anonymous]

Why would someone need catch up contributions?

[Anonymous]

Sorry boomers

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Just calm down everyone. This is not a big deal. The bulk of your contributions will remain pre-tax, just the catch-up portion will be after tax in ROTH. For each individual, it will be a neglectable increase in taxes, but for the country as a whole, this will results in more tax revenue coming in today (rather than down the road).

It's not just a tax concern. Today we can put in 7,500 additional and pay no tax on that today to max out. In the future, we will need to put in 12-13k to net 7,500 after taxes. So that's increasing the contribution by about 50% to have the same amount of principal earning returns. Your tax rate may vary.

If this is your level of understanding, you really ought to be paying someone else to make your financial decisions for you. The taxes are a wash if you are at the same tax rate, so the crux of the question is whether you expect to be paying the same tax rate when you withdraw. Many can predict whether they will be in a lower tax bracket in retirement but with speculation that eventually tax rates may jump due to the national debt, it’s anyone’s guess whether the lower tax bracket will have a rate that’s lower than you pay now.

Stick to topics you know. Taxes and investing is not one of them. Your assumptions on taxes being a wash is inaccurate. You also fail to realize that the Roth does not reduce your current year adjusted gross income. You lose the a benefit to tax avoidance with this change. And there is zero thought to how one can reduce future tax rates during retirement as you consider it a guess. Financial planning involves tax planning and wealth transfer. But that’s above your googling advice.