Posts by Michele Cagan, CPA
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Ask an Advisor: I’m Already Retired But I’ve Been Converting $10k at a Time From My 401(k) to an IRA. Is This Wise?
I retired in 2022 at 62 years old. I have a $2,900 monthly pension and draw $1,900 per month in Social Security. I have $520,000 in my 401(k) and $24,000 in an IRA. I currently move $10,000 from my 401(k) to my IRA every time it increases $10,000 in value. Is it wise to do… read more…
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Ask An Advisor Can I Reinvest My RMD in Stocks or Real Estate? I Worry About Double Taxation
If I am not spending all my required minimum distribution (RMD) money each year, can I roll some of this back into my stocks? If so, will I be taxed on the amount rolled back in? Would this be considered double taxation? If I’m only taxed on the additional interest this money generates when I… read more…
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I’m Getting Mixed Advice: Will I Owe Taxes When I Roll Over My Roth 401(k) to a Roth IRA?
I have an after-tax 401(k) that I would like to roll over to a Roth IRA with Schwab. Experts at Schwab say it can be rolled over to a Roth IRA without paying any taxes. I think they are wrong as I will still have to pay taxes on the earnings and capital gains accumulated… read more…
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When I Claim My $4,000 Social Security, Will My Wife Automatically Get a Spousal Benefit?
My wife is 76, born in 1948. She retired at full retirement age and currently collects $1,076 per month. I will be retiring and start collecting at 70 this year (I was born in 1954). When I collect $4,000+ per month does her monthly payment go up to spousal benefit automatically or does it have… read more…
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Ask an Advisor: I’m 44 With $1 Million in Retirement Savings. I Want a Backdoor Roth IRA, But I Don’t Know Where to Start
I’m 44 with $1 million in my 401(k), IRA and Roth IRA. Since my total household is above the threshold for investing in a Roth IRA, I have been considering employing the backdoor Roth IRA tactics. I left $700,000 in a 401(k) at my old employer. I am trying to strategize on “distributing” the old 401(k) balance… read more…
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Ask an Advisor: How Do I Structure My Withdrawals to Keep My Healthcare Subsidies? I’m 60 With $2.4 Million
At the age of 60, I recently entered retirement after being a business owner. I’ve been securing health insurance through the marketplace since its inception. Currently, my income is derived solely from withdrawing money from my taxable portfolio, comprising reported dividends and capital gains totaling less than $60,000 annually. An advantageous outcome of this approach… read more…
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Ask an Advisor: My Wife and I Want to Retire Early. How Many Different SEPPs Can We Have?
My wife and I plan to retire before age 59 ½. How many different 72(t)s can a household utilize? For example, if I have two traditional IRAs at two separate brokerages, can I take substantially equal periodic payments from each or do I need to consolidate them into one first? Since we file our taxes… read more…
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Ask an Advisor: Is a Backdoor Roth Conversion Taxable Even If I Didn’t Take a Deduction on My IRA Contributions?
I’d like to ask about the backdoor Roth IRA. Say you are over the income limit for Roth contributions, so you make a traditional contribution with no tax deduction and then do a backdoor Roth. Is that conversion taxable? If so, you would be paying tax on that money twice since you paid tax on… read more…
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Ask an Advisor: I’m 74 With $120k in My 401(k). Should I Get a Financial Planner to Help With RMDs?
I have a 401(k) with $120,000 in it. I’m 74 and getting the required minimum distribution at the end of each year. Do I need a retirement planner to help handle the withdrawal? – Susan While technically you don’t need a financial advisor to handle your retirement account withdrawals, it can be useful to talk… read more…
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Ask an Advisor: I’m 67 With $218k in an IRA. Should I Start My Withdrawals Now to Reduce Future RMD Taxes?
I’m turning 68 shortly and plan to wait to claim my Social Security at age 70 to maximize the monthly benefit. I also plan to retire at the end of the year, if not sooner (so in three months or less). Does withdrawing from my traditional IRAs (current balance is $215,000) to reduce the income… read more…
Retirement Planning
Ask an Advisor: I Made $310,000 Last Year and Have $546,000 in Retirement Savings, But My Spouse Doesn’t Work. How Can I Save More?
I am 48 years old. I made $310,000 last year and I currently have $546,000 in my retirement plan at work. My husband is on disability and doesn’t work and does not have a 401(k) plan. I wanted to open a Roth IRA but I read that I make too much money. What options do… read more…
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Ask an Advisor: How Can I Get the Biggest Benefit From an Electric Vehicle Tax Credit?
I purchased a Ford electric vehicle in February 2023. According to the IRS, it qualifies for a $6,843 tax credit. So in order to get my taxes to this amount, I’m not paying estimated taxes and will take a little more than my required minimum distribution from my IRA to get my tax liability up… read more…
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Ask an Advisor: We’re in Our Mid-50s and Have $2 Million in Our 401(k)s. Should We Pivot to Roth Contributions?
We are a dual-income couple in our mid-50s with over $2 million in our 401(k)s. Should we “sacrifice” the pre-tax benefit and switch to Roth contributions at work? -Wendy Like most tax-related questions, the answer is “it depends.” Based on… read more…
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Ask an Advisor: I Want to Give Money to My Son and Daughter-in-Law. How Much Money Can I Give Away Without ‘Incurring a Tax Issue With the IRS?’
How much money can I give to my son and daughter-in-law without incurring a tax issue with the IRS? -Irwin For 2023, you can give your son and daughter-in-law each $17,000 without having to deal with the IRS. But even… read more…
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Ask an Advisor: ‘How Can I Mitigate This Situation?’ My Tax Bill Is Huge Because My Investment Accounts Don’t Withhold Capital Gains
My investment accounts don’t withhold taxes from my capital gains, which is causing me to owe large amounts when I file my returns. How can I mitigate this situation? -David As capital gains distributions are unpredictable and usually unknown until… read more…
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Ask an Advisor: Can a Single Financial Advising Firm Address ‘My Complete Spectrum of Financial Concerns?’
Can one individual or organization cover my complete spectrum of financial concerns, including investment diversification and maximum returns, income tax optimization, required minimum distribution (RMD) management, and steady income cash flow? Is there a good way to survey fiduciary candidates… read more…
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Ask an Advisor: With Only a Few Hundred Dollars, How Do I Get Started Investing for Retirement?
Is there a way to start a retirement account with only a few hundred dollars, then add to the account each payday? -Dave So many people put off saving for retirement because they feel like they can’t contribute enough or… read more…
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Ask an Advisor: Help Me Understand the Math. How Does Donating to Charity Reduce My Taxes?
If I give $50,000 in cash to a charity, does that lower my taxable adjusted gross income (AGI) by $50,000? So if my adjusted gross income was $100,000, and I gave $50,000 to charity, is my taxable income now $50,000?… read more…
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Ask an Advisor: I’m Looking for ‘a Tiebreaker’ After 2 Advisors Suggested Different Social Security Strategies. Which Advisor Should I Choose?
I’m speaking with two advisors and am looking for a tiebreaker. One advisor says to wait to take Social Security until I’m 70. The other says to take it now, taking the mindset that “a bird in the hand is better… read more…
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Ask an Advisor: Help Me Understand the ‘Best Way’ to Manage an IRA. Is It Better to Pay Taxes Now or in Retirement?
Which is the best way to handle an individual retirement account (IRA)? Let it sit and earn money, then pay taxes on the withdrawals in retirement? Or roll it over to a Roth IRA? Should I pay the taxes now… read more…
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Ask an Advisor: I lost My Job. Can I Tap Retirement Accounts Without Penalties?
I lost my job last year and need to take care of a parent. In doing that, I must withdraw money from my retirement. I don’t understand the tax implications and penalties. I would also like access to any savings… read more…
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Ask An Advisor: What Midyear Moves Will Cut Our Tax Bill?
We gained additional income and didn’t withhold enough on our Form W-4. We are currently not putting money into a retirement account but have access to a 401(k) through our employer. Would we be able to correct our withholding deficit… read more…