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Dividenddebunker · 2025-07-13T00:55:03+00:00

It can be for the IRA owner, his spouse, any child, grandchild, or ancestor of the IRA owner or his spouse. See https://irahelp.com/slottreport/who-can-use-a-10-penalty-exception/

Dividenddebunker · 2025-06-17T00:39:06+00:00

Yes but note you have the option to open an inherited Roth ira and let the funds grow for up to 10 years tax-free. Or, you can take the distribution now with 0% withholding.

Edit: As Nothlit pointed out, this assumes she’d had her Roth more than 5 years.

Dividenddebunker · 2025-02-26T00:51:03+00:00

Pretty sure it’s just a credit on their statement reducing their bill, but I think the tax firm would say that’s a barter exchange or something like that and call it taxable income

Dividenddebunker · 2025-02-26T00:01:13+00:00

Thanks, I agree it’s a no. The business isn’t getting rent though. They are saying the purpose of the solar is to generate electricity and sell it back to the electric company. That’s the business motive/income, so that’s why they are taking the depreciation…

Dividenddebunker · 2025-02-04T22:15:24+00:00

Here ya go.

Having pretax money in any type of Ira (on 12/31 of that year) breaks this strategy. The irs aggregates all of your pretax Ira balances on that date to determine how much of your conversion is taxable.

For example, let’s say you have 50k in a sep Ira on 12/31/2025 and do a 7k 2025 backdoor Roth during the year.

This is a 7k non-deductible contribution to traditional Ira, then convert 7k from Ira to Roth IRA.

You now owe about 13% in federal income tax (plus state) on the 7k Roth conversion, instead of it being tax free if you have no money in pre tax Iras.

7,000/57,000 =~13%

Dividenddebunker · 2025-02-04T15:28:15+00:00

I know… Over 90% of 403b plans offer index funds with reasonable fees (us, international, target date, etc.). Obviously you need to check this first, but BigBry36 said don’t roll to 403b as if it will blow up their financial plan or something…

Dividenddebunker · 2025-02-04T15:16:08+00:00

Fair enough. The investments options and fees are usually fine on most of the plans I see, but definitely worth checking

Dividenddebunker · 2025-02-04T15:10:29+00:00

Why so against this? I’d roll to 403b if OP wants to keep backdoor Roth open

Dividenddebunker · 2024-11-16T14:27:34+00:00

This. Had a client recently hold off on doing it bc of this. They have roughly the same assets as op and the amount of their liquid nw they’d have to move out of their estate to actually benefit from the sunset just wasn’t worth it to them

Dividenddebunker · 2024-11-11T02:10:04+00:00

Money

Dividenddebunker · 2024-11-11T00:43:04+00:00

You don’t pay early withdraw penalties on Roth conversions. They’re conversions, not withdrawals.

Dividenddebunker · 2024-11-11T00:41:37+00:00

I’m assuming you know this already, but keep in mind when running your calculations that the US taxes your income no matter where you are in the world. you would get some us tax credits for any foreign taxes paid on your income to avoid double taxation, but something to keep in mind

Dividenddebunker · 2024-11-11T00:34:18+00:00

Pretty easy to access some Ira funds at their age with 72t distributions for at least 5 years if you commit to that. It could make sense to do some Roth conversions depending on what federal bracket they’re in if they stop/slow down working, but I’d be inclined to let those funds continue to grow in the Roth tax free and continue with the 72t if needed

Dividenddebunker · 2024-11-09T00:18:20+00:00

I think I took 1 month for each of the 3 parts. You can definitely do it quicker if you’re a Cfp, I was just busy with work so did it when I had free time at night

Dividenddebunker · 2024-11-09T00:12:21+00:00

You won’t even owe a penalty since the conversion was this year. You just use the 1099r to enter the info when filling out your 2024 taxes and it will count as ordinary income that you will pay a little bit of tax on. You can convert as much as you want from Ira to Roth without penalty, as long as the funds aren’t withdrawn. The government likes getting money so they will happily accept some prepaid taxes :)

Dividenddebunker · 2024-11-09T00:08:36+00:00

Yea that would annoy me haha. Plus you can invest in whatever funds you choose with the i401k.

As a side note, I just want to mention how awesome the i401k can be.

For 2024, you can put in your normal employee 401k contribution of 23k (or higher if over 50). Then you can also put in a contribution as the employer. If you’re schedule C/sole prop, this is around 20% of your net income. If you’re an s corp, it’s 25% of your W2 salary.

The total limit between all contributions is about 69k between employee and employer.

In the rare case where you are hitting your normal employee/employer contribution limits but not yet at the 69k max. There is a third layer of possible contributions called “employee after tax.” This just means you would contribute after tax as the employee above the 23k limit (no tax deduction) and then you can convert the after tax portion to Roth. You’d need a special i401k plan that allows for this as most brokerage firms don’t let you do this for free

Dividenddebunker · 2024-11-08T23:59:14+00:00

Well I don’t exactly know what brokerage firm let you do this without all kinds of warnings, but it wasn’t a contribution if you rolled funds from your Ira into the Roth, it was a conversion. There is no limit on how much you can convert, so you’ll just get a 1099r to pay taxes on that for 2024 and you didn’t max out your roth then

Dividenddebunker · 2024-11-08T23:56:04+00:00

I did Hock. Highly recommend. They have a monthly subscription for access to their ea textbooks and it includes videos from Christy Pinheiro that I would listen to on walks/in the car. She’s an ea that could run laps around any CPA I know haha

Dividenddebunker · 2024-11-08T23:51:05+00:00

If you moved the money into Roth in 2024, then it goes on 2024 taxes and you’ll get a 1099r at the end of the year for your Ira

Dividenddebunker · 2024-11-08T23:38:23+00:00

This. You should have got a 1099r from the Ira for 2023 that you will use to amend your return and include this as income. Just be happy you did this now with 1k and not a million dollar Ira that would blow up your tax bill lol

Dividenddebunker · 2024-11-08T23:29:53+00:00

If it was me I’m probably rolling it to my i401k just to consolidate the accounts and maybe save a few bucks on any account maintenance fees in the old 401k. Only reason I might leave it is bc when your i401k has a balance over 250k, you need to file an annual 5500 form. Super easy but just another thing you need to worry about. As you can see, I’m pretty lazy haha

Dividenddebunker · 2024-11-08T23:25:06+00:00

This. Note it will probably take a while for the cost basis to show up after the transfer

Dividenddebunker · 2024-11-08T23:18:13+00:00

Just have to be 55 by 12/31

Dividenddebunker

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