Primerica

[DHK]

(I have never owned $500,000 in my life.)

Which is why Ed Slott's comments don't apply to you and I indicated that.

I don't know (and I don't care) why Ed Slott's thoughts and comments are so offensive to you.

You asked a question and I answered it.

Now you're taking offense with the answer.

Get over it.

 

[Allen Trent]

I love Ed Slotts information & I love most of Dave Ramsey information, but I have never liked the one size fits all comments from both of them or others like them. However, they both do much more good than bad, but I do wish that were more clear of who their generic advice was intended for.

I would say most people over 70 1/2 cant even make IRA contributions as they dont have earned income from wages/ self employment. Then, even if they do have wages/self employment, how many actually get a deduction for the contributions? With over 80% of people over age 70 being in the 0% tax bracket (according to the IRS), most wont benefit from a traditional IRA contribution if it doesnt lower their tax bill (might as well make it a Roth contribution).

If it doesnt save on taxes, plus makes your RMD immediately higher, why tax defer a traditional IRA value for a later tax bill to yourself or your heirs. Might as well make it a Roth contribution or use it to buy life insurance or long term care (if you have those needs & dont need the income from the contributions being made).

But for the 20% of people over age 70 that are not in the 0% federal tax bracket (IE: standard deduction doesnt wipe away all their taxable income & SS), and they have earned income from wages/self employment, then they certainly can make traditional IRA contributions if they & their tax person believe it can help them on their current tax return (or even a SIMPLE IRA for larger contributions if self employed.

Have seen a lot of people make traditional IRA contributions long after they could take a tax deduction, thus they were inadvertently making after tax contributions to an account that they will get 1099s for in the future when they take money out or die & almost no one will have a record of how much of the total Traditional IRA was pre-tax & after tax, thus paying taxes on the same money twice by commingling pre-tax & post tax money in the same traditional IRA account.

 

[LostDollar]

You asked a question and I answered it.
.

Yes, you did. I appreciate the time you took to do so and have given you a like for that particular post.

 

[LostDollar]

I love Ed Slotts information & I love most of Dave Ramsey information, but I have never liked the one size fits all comments from both of them or others like them. However, they both do much more good than bad, but I do wish that were more clear of who their generic advice was intended for.

I would say most people over 70 1/2 cant even make IRA contributions as they dont have earned income from wages/ self employment. Then, even if they do have wages/self employment, how many actually get a deduction for the contributions? With over 80% of people over 70% being in the 0% tax bracket according to the IRS, most wont benefit from a traditional IRA contribution if it doesnt lower their tax bill (might as well make it a Roth contribution). If it doesnt save on taxes, plus makes your RMD immediately higher, why tax defer a traditional IRA value for a later tax bill to yourself or your heirs. Might as well make it a Roth contribution or use it to buy life insurance or long term care (if you have those needs & dont need the income from the contributions being made).

But for the 20% of people over age 70 that are not in the 0% federal tax bracket (IE: standard deduction doesnt wipe away all their taxable income & SS), and they have earned income from wages/self employment, then they certainly can make traditional IRA contributions if they & their tax person believe it can help them on their current tax return (or even a SIMPLE IRA for larger contributions if self employed.

Have seen a lot of people make traditional IRA contributions long after they could take a tax deduction, thus they were inadvertently making after tax contributions to an account that they will get 1099s for in the future when they take money out or die & almost no one will have a record of how much of the total Traditional IRA was pre-tax & after tax, thus paying taxes on the same money twice by commingling pre-tax & post tax money in the same traditional IRA account.

Well crafted answer. thanks for taking the time to make it. (and other tax related comments you have made in various posts.)

I love Ed Slotts information & I love most of Dave Ramsey information, but I have never liked the one size fits all comments from both of them or others like them. However, they both do much more good than bad, but I do wish that were more clear of who their generic advice was intended for.

Exactly.

But for the 20% of people over age 70 that are not in the 0% federal tax bracket (IE: standard deduction doesnt wipe away all their taxable income & SS), and they have earned income from wages/self employment, then they certainly can make traditional IRA contributions if they & their tax person believe it can help them on their current tax return (or even a SIMPLE IRA for larger contributions if self employed.

I don't know about percents, but this is a more precise and concise expression of the point I was trying to make in an earlier longer and more complicated post which I removed. Thank you for coming up with this focused statement.

I have no clue about the other situations described in your post but I can see how they could be problems based on your explanations.

 

[LostDollar]

But for the 20% of people over age 70 that are not in the 0% federal tax bracket (IE: standard deduction doesnt wipe away all their taxable income & SS), and they have earned income from wages/self employment, then they certainly can make traditional IRA contributions if they & their tax person believe it can help them on their current tax return (or even a SIMPLE IRA for larger contributions if self employed.

I see a question in my tax software each year about whether a SEP/SIMPLE box is checked on 1099's.

So a SIMPLE IRA is some special product for self employed people?

 

[Allen Trent]

I see a question in my tax software each year about whether a SEP/SIMPLE box is checked on 1099's.

So a SIMPLE IRA is some special product for self employed people?

Kind of. Not a product, just a tax label the IRS permits. Example, a Traditional IRA & a Roth IRA at a bank can be a label placed on a bank CD. The underlying product is identical "bank CD", but the tax label put on the product will determine current & future tax treatment & rules related to contributions into it

SIMPLE is exactly like a Traditional IRA, but for Self employed & small employers. For Self-employed, it allows a lot more to be contributed annually because the employed doesnt have an employer plan like a 401k. IE--Can contribute $15.5K per year plus added $3.5K more if over age 50.

Also, for small employers, they can install a SIMPLE plan. Basically, they are IRAs at work where employee defers how much they want to contribute & employer matches up to 3% or so of annual employee income. way easier to adminster & not as costly to an employer as a full 401k, etc.

way more specifics than this, but that is the generic info

 

[LostDollar]

I cannot comment without having done a full fact-find... but I am not in favor of deferring taxes indefinitely considering the effect of the national debt and the direction taxes must eventually go.

If you want to continue to defer to an unknown tax not knowing how much you still owe on your total IRA balance, that's your business.

Traditional IRA contributions could be used in at least two different tax planning strategies to provide benefit to taxpayers.

One would be a long-term deferral (say for decades) of payment of taxes.

Another would be a short-term shifting (say within 1 to 5 year time buckets) of tax payment obligations from one year to another.

When I, as a post RMD age taxpayer currently able to make an IRA contribution, spoke of making some Traditional IRA contributions, I was not talking about using them as a long-term tax deferral tool.

I was using them as a short term tax shifting tool so I could rearrange the timing of tax payment obligations within the current tax bracket structure ending in 2025

 

[PrivClientSG]

I've seen Ed present numerous times. He was the speaker at our local estate planning councils' Estate Planner's Day. No offense, but I've heard all the experts on retirement plans, distribution planning, etc., present. I've gone to Heckerling for the past 30 years, and have heard Natalie Choate present there annually. I've heard Bruce Steiner, Lenny Witman, all of them. To some extent, a lot of this is case-specific, and built upon the facts and circumstances of a specific client.

That said, I am not impressed with Ed Slott. Knowledgeable guy, has a nice presentation, informative, and so on. But what does that really mean? Is he the foremost leading expert on retirement planning? Distribution planning? Estate planning with retirement/qualified assets? No, he's not. The "financial planning" moniker has become so bastardized that it's become more about marketing, selling books, etc., than it is about real-world, client-focused planning. One size fits all doesn't fit.

I also think that who is the client and how much their retirement plan assets are worth, as well as their estate, is a critical question. There are a lot of critical questions.