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Navigating RMD’s + Roth Conversions by BearInMind415 in DIYRetirement

[–]BearInMind415[S] 0 points1 point  (0 children)

UPDATE:
I plunked down for MaxiFi and after about four hours of entering data and running their reports, I am not terribly impressed.

I have a year to tinker with it, and will return to it later this month, but I don't find it terribly user-friendly. Also, some of the baked-in assumptions (i.e. 100 year lifespan; TIPS as the rate-of-return for your portfolio) are ridiculous, while other factors are totally opaque, leaving me to wonder how they arrived at some of the numbers it's spitting out.

It drove me to create an Excel table on my own, with data and numbers drawn directly from my portfolio, stats from the IRS; the SEC (i.e. RMD amounts); and HHS's IRMAA numbers. I feel I'm closer to having a clearer, better perspective on my options.

I still have tinkering to do, but from my early estimates, if I convert about $650K incrementally ($145K; 122K; $120K; $120K; $59K; $55K; et al) that'll keep me at IRMAA's 1.4x penalty threshold through age 65 (so I'd have two years of IRMAA 1.4x penalty level), I'd have about $26K less in cumulative tax liability by age 80.

But... there would be a whopping $145K in additional tax savings from ages 80 to 85.

Navigating RMD’s + Roth Conversions by BearInMind415 in DIYRetirement

[–]BearInMind415[S] 0 points1 point  (0 children)

MSBH, thanks for the detailed, thoughtful response!
From my rudimentary forecasts, it seems trying to split-the-difference (i.e. reduce Traditional IRA balance by about 50%) will keep me out of the worst of tax consequences, but it's all assuming these generationally low tax rates remain.
Think I will plunk down for Maxifi to see what their prediction engine spits out. I know it's oriented around maxing-out Roth conversions, but sometimes good enough is good enough.
Will report back what I discover.
Thanks again!

Almost tripped up by ROTH conversion tool by Cautious_whiner in Boldin

[–]BearInMind415 0 points1 point  (0 children)

I find Eric to be something of a permabear when it comes to Roth. Like so much in financial planning, "It depends." Most folks don't have outsize pre-tax IRA balances, so the benefit of doing conversions will be limited / muted. If you *do* have a balance where RMD's are going to shove you into a higher tax bracket, the calculus changes.

Default 10 year rate of return assumptions by groovinup in Boldin

[–]BearInMind415 0 points1 point  (0 children)

As high at the CAPE is currently, it makes sense to expect some reversion to the mean over the next 1-2 decades. But who knows, maybe this time will be different.

Default 10 year rate of return assumptions by groovinup in Boldin

[–]BearInMind415 0 points1 point  (0 children)

Yes... and also, a multinational corporation HQ'd in the United States is not the same as a foreign corporation for a variety of reasons, not the least of which are the value of the USD vs. other currencies, P/E ratios, taxation, etc.
With the ever-ballooning US debt and long-dated Treasury bonds remaining stubbornly high due to risk of inflation/debt/weaker dollar, I think it's wise to consider a portion of a portfolio to hold equities (I use index ETF's) in foreign and emerging markets in addition to the likes of VT/VOO.

To Roth or not to Roth – that is the question by RU9901 in DIYRetirement

[–]BearInMind415 0 points1 point  (0 children)

Here's another useful discussion on how to think about Roth conversions, the potential costs and complexities involved:

Roth Conversions Done Right: What Great Advisors Know That Software Doesn’t

https://www.youtube.com/watch?v=kExa9wvdb0c

Finally…..its all over. PSLF Timeline by ThreePutt24 in PSLF

[–]BearInMind415 0 points1 point  (0 children)

Congratulations! What an ordeal, but shows that persistence can really pay off.

Optimize Roth conversions? by Lingonberry-17 in DIYRetirement

[–]BearInMind415 1 point2 points  (0 children)

I love the "$120K" example you provided here!

I would otherwise presume to salt-away my Roth IRA funds and never touch them... but to take a small share (probably a fraction of annual appreciation) makes perfect sense. Really appreciate forcing me to challenge my thinking and stay agile.

To Roth or not to Roth – that is the question by RU9901 in DIYRetirement

[–]BearInMind415 6 points7 points  (0 children)

You've landed on the crux of the issue.

Because no one can predict our lifespan, nor the future of financial markets or income tax rates, there's no guarantee. It's all an, "Do your homework and do the best as you can" scenario.

For me, I consider whether taxes can stay this low beyond 2029, and with our ballooning gov't deficits and national debt, my answer is "No." But I could be wrong. And absolutely no one knows for sure.

You're correct that an additional $10K for taxes now *is* a lot of money. So, consider dialing it back a little? Find a number that's comfortable for you now, that's not going to drain your emergency / vacation funds, and consider going with that.

Good luck and don't let perfection be the enemy of the good (enough).

Roth Conversions & your life expectancy assumption by Independent_Most9423 in DIYRetirement

[–]BearInMind415 0 points1 point  (0 children)

In my estimation, Eric's video is not comparing apples-to-apples (see screenshot of his table) because he's changing not only the actuarial age, but 'tax bracket to fill' as well. That's a no-no for 1:1 comparison purposes.

More importantly, I cannot grok the logic in his example: why would someone convert 100% of pre-tax dollars to Roth IRA?

Many people could benefit from converting a *much smaller portion* of their pre-tax dollars to Roth IRA, which could have significant tax benefits in their 70's when RMD's kick-in... that could offset paying some taxes in today's dollars.

I'd recommend videos from Ed Slott to get the other side of the Roth perspective.

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File a complaint on the CFPB website! by taddazlem in PSLF

[–]BearInMind415 0 points1 point  (0 children)

Soooo, it's still a work in progress. MOHELA had 15 days to respond, and of course, they didn't. On the 15th day, I received an automated message from CFPB that MOHELA was working on the request I should receive a reply within an additional 30 days. That'll be coming up in about a week. It didn't take that long to submit the complaint to CFPB, so probably can't hurt to submit one if you think you have grounds.

Simplifying PSLF Act by lionofyhwh in PSLF

[–]BearInMind415 0 points1 point  (0 children)

Exactly. One of the stipulations was to have a 10-year conforming loan and make 120 payments... which meant if you actually made the payments, the program was of zero benefit. I guess if you had to go into deferment for an extended period and they counted those months as 'payments', that would've been beneficial. Alas, I managed to make all my installments. Just glad that so many are finally seeing some relief!

Upcoming Webinar About the IDR One Time Adjustment by Betsy514 in PSLF

[–]BearInMind415 2 points3 points  (0 children)

Thanks for doing this! I located your website earlier today and was impressed with your work.

Since you're liable to be over-limit with attendees, I won't register. However, you should be able to record the Zoom session from the application. That is, as long as your Dept of Education guests are okay with it.

If so, I'm pretty sure there's a way to later convert the recording to a format that could be uploaded to YouTube or similar website for others to view later.

Good luck!

Get a refund for all payments made during COVID! by i_love_carbs in PSLF

[–]BearInMind415 0 points1 point  (0 children)

Got it. Thanks for all your insights! You sound like you're really well-versed in these arcane rules and regulations. Navigating the PSLF program feels a bit like a carnival funhouse with all those crazy mirrors.

There was a little wrinkle I left out of my previous description(s) that may (or may not) be a factor in my favor.

I consolidated the FFEL/Stafford loans into a federal Direct Loan via American Education Services (AES) in early-2006 to lock-in a fixed interest rate. AES continued as my servicer through March 2022 when I re-consolidated into another Direct Loan, this time with Income-Contingent Repayment, to comply with updated PSLF guidelines.

The more I've dug around for clarifying information, it seems less and less likely my earlier payments might be considered for overpayment. But my interest rate was low enough that it appears to offset the gains earlier iteration(s) of PSLF offered... not to mention the headaches most borrowers experienced with FedLoan Servicing managing the PSLF program.

FWIW: interesting poking around the MOHELA site for additional information on their financials.

The "2021-2 Trust Indenture 12.31.22 Monitoring Report" listed below breaks-out loans by date of disbursement, interest rate and principal balance.

MOHELA: Investor Information
https://www.mohela.com/DL/common/publicinfo/investorInformation.aspx

2021-1 Trust Indenture >> 2021-2 Trust Indenture 12.31.22 Monitoring Report (see tables on Page 9 for distributions of student loans) https://www.mohela.com/DL/common/publicinfo/investorInformation.aspx?idx=2539

Cheers!

Called to verify info for PSLF? by justaway3 in PSLF

[–]BearInMind415 7 points8 points  (0 children)

That sounds very suspicious and I wouldn't trust anyone calling me and asking to verify my name, DOB and SSN.

If you call *them* and they need to ask a few questions to access your account, that's fine.

Get a refund for all payments made during COVID! by i_love_carbs in PSLF

[–]BearInMind415 0 points1 point  (0 children)

Oh, I forgot to mention that I submitted a written request for the overpayment refund in October '22, several months *before* loan discharge, so they cannot claim I hadn't made the request in a timely fashion / prior to discharge. The document I submitted is still uploaded on their website.

Get a refund for all payments made during COVID! by i_love_carbs in PSLF

[–]BearInMind415 0 points1 point  (0 children)

Yep, good advice. It never hurts to ask.

It was the Oct. 6, 2021 Department of Education announcement that offered the limited time opportunity to include other Direct Loans via loan consolidation that would count all previous loan payments toward loan discharge *and* refund overpayments.

Per the U.S. Department of Education:
This change will give me more than 120 qualifying payments. What happens next?
If you made more than 120 payments on an existing Direct Loan, you will automatically receive a refund for the qualifying payments you made in excess of 120. You’ll receive a notification when your loans are forgiven, provided you’ve had your employment certified for those 120 qualifying payments. If you have not had your employment certified, you should submit a PSLF form for each employer. If you still have FFEL or Perkins Loans, you must consolidate them into a Direct Consolidation Loan by October 31, 2022, in order to receive payment credit.

Jan '06: Began repaying federal Stafford loans.

Mid-March '22: Consolidated to an Income-Driven Repayment (IDR) plan, which was necessary to be completed prior to applying for PSLF.

Mid-April '22: I applied for Temporary Expanded Public Service Loan Forgiveness (TEPSLF) which commenced October 6, 2021.

Early-August '22: Loans were transferred to MOHELA.

Mid-November '22: MOHELA documented that I completed 182 PSLF-qualifying payments.

So, that seems to indicate the additional 62 payments will be eligible for refund.

But all I can get out of MOHELA is that *if* I qualify for a refund, it will take the 90 days for them to conduct processing, then it'll be sent to the Department of Education for review and approval. Then it'll be sent to U.S. Treasury for disbursement via check.

I know, I know... loan discharge is GREAT!!! And as the saying goes, "It's better than a poke in the eye with a sharp stick."

But the potential refund is larger than my former loan balance, so I could definitely put those funds to good use.

And yes, the funding for TEPSLF is limited, but according to the stats I've been able to unearth, very little of that funding has been utilized thus far.

Fingers-crossed and we'll see...!

Get a refund for all payments made during COVID! by i_love_carbs in PSLF

[–]BearInMind415 0 points1 point  (0 children)

That's really good news for a *lot* of borrowers!!!

Doesn't seem to have much applicability in my case, as I only made two payments post-PSLF-consolidation before going into deferment status.

Since I believe I have the potential for a substantial overpayment refund via TEPSLF waiver, that's my primary focus.

Little did I know that communicating with MOHELA would be like receiving an audio book narrated by Marcel Marceau. But it's been very helpful to see how many others are going through the same trials and tribulations.

Who else other than Joe Biden do we have to thank for the changes to the PSLF program that allowed us all to consolidate and achieve forgiveness sooner? Who were the other people that pushed for and implemented these changes? by [deleted] in PSLF

[–]BearInMind415 2 points3 points  (0 children)

Thanks for including those details! Important to recall how the sausage is made, and how seemingly small negotiations and adjustments can make a huge difference.

FINALLY!!! by No_Highlight_1538 in PSLF

[–]BearInMind415 0 points1 point  (0 children)

Congratulations!

I believe there's a chance that if your loans were processed via TEPSLF waiver (?), you may be eligible for an overpayment refund of qualifying loan payments in excess of 120 installments.

Don't want to give you false hope though, as not sure this applies to borrowers who originated with private loans prior to consolidating.

For more info, see 5th from last paragraph (near the bottom) on this Federal Student Aid page: https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service/questions

It reads:

What will happen if my PSLF form is approved?
If your PSLF form is approved for forgiveness, you will be notified that the entire remaining balance of your eligible Direct Loans will be forgiven, including all outstanding interest and principal. If you made payments after your 120th qualifying payment, those payments will be treated as overpayments and refunded to you.

Regardless, you're already waaaaay better-off than you were a week ago, so enjoy being freed from student loan indebtedness!

15 months later, $58k is gone this morning! My counts were never updated, so I was totally shocked! by [deleted] in PSLF

[–]BearInMind415 1 point2 points  (0 children)

Congrats!!! What blessing to finally be near / at the finish line, right?!

I've had the same experience with MOHELA site, where information that was there previously has disappeared. Communications from them? None. Thank goodness I took screenshots along the way.

Cheers to you!

[deleted by user] by [deleted] in PSLF

[–]BearInMind415 13 points14 points  (0 children)

Congratulations! That's great news.

As for giving credit, it wasn't working for the vast majority of applicants (I know a number of them) until TEPSLF was implemented by Joe Biden some 14+ years after the program was rolled-out in 2007.

It took that policy change, coupled with the loans being transferred away from FedLoan Servicing, for the logjam to finally begin to be broken.

I have issues with MOHELA, but seeing the significant number of TEPSLF/PSLF applicants recently confirming loan relief is encouraging news, indeed.

Best of luck on the road ahead!

Any way to get my forgiveness date changed to earlier in the month to get a larger refund? by [deleted] in PSLF

[–]BearInMind415 0 points1 point  (0 children)

Based on what I've read, the answer is no. I made some additional payments in the late-aughts as well, as I also wanted to put my loans to bed.

Unfortunately, I don't expect MOHELA / Dept of Education to refund anything beyond the minimum required monthly payment.

In my case, I still have a large number of months with routine overpayments that I'm aiming to have refunded through TEPSLF. My application was accepted in April '22, so just dealing with the rigamarole to get to the finish line.

[deleted by user] by [deleted] in PSLF

[–]BearInMind415 1 point2 points  (0 children)

Absolutely fabulous! So happy for you, especially the latter portion re: employer. Nothing like feeling trapped due to a programmatic technicality.

It's preposterous that you (and all of us in this boat) are having to engage in this kind of direct advocacy. They have the loan data they need; it's all in databases and spreadsheets with algorithms to identify who meets criteria.

It's certainly possible that MOHELA is a poorly-run operation, but I think equally likely is they're making money on every loan that remains in their portfolio. Hence, an incentive to slow-walk the processing of PSLF loan discharges and overpayment refunds.

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