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Money Talk > Retirement Planning

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kmelton23
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advice needed  Reply with quote  

Hi everyone. I have some questions and am in need of info. My wife and I are 34 yrs old and work as nurses so our income is decent, however we have been utilizing nearly all of it to live on. W have some in retirement accounts. Our debt included house, cars, student loans and 2 credit cards. We recently came into some money and paid off all of our debt including house, cars, etc. We have a chunk left over and our looking for advise on the best management of it. It came from the state, and we paid 25% taxes on it, however we are worried it may put us in a higher income bracket and require more taxes to be paid. How do we avoid more taxes? I need some ideas on how we can grow this new money. Thanks in advance for your help.
Post Thu Oct 31, 2013 2:38 am
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Wino
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Re: advice needed  Reply with quote  

quote:
Originally posted by kmelton23
...looking for advice on the best management of it.

First off, if you need advice, you should go to a certified financial adviser. We offer suggestions, opinions, personal anecdotes, and apocryphal guidance here.

The above having been said, you should look in to tax-managed mutual funds. https://personal.vanguard.com/us/insights/taxcenter/planning/tax-exempt-tax-efficient-funds is one such article you might want to read.

You may not qualify for a Roth IRA. The cut-off is about $178K for a couple in 2013. If you don't qualify for a Roth, look in to "back door Roth" for future tax savings.
Post Thu Oct 31, 2013 5:09 am
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clydewolf
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Re: advice needed  Reply with quote  

quote:
Originally posted by kmelton23
Hi everyone. I have some questions and am in need of info. My wife and I are 34 yrs old and work as nurses so our income is decent, however we have been utilizing nearly all of it to live on. W have some in retirement accounts. Our debt included house, cars, student loans and 2 credit cards. We recently came into some money and paid off all of our debt including house, cars, etc. We have a chunk left over and our looking for advise on the best management of it. It came from the state, and we paid 25% taxes on it, however we are worried it may put us in a higher income bracket and require more taxes to be paid. How do we avoid more taxes? I need some ideas on how we can grow this new money. Thanks in advance for your help.

Do you participate in your employer's 401k/403b/457 plans?
You should, and contribute the maximum amount (Think of the annual limit, $17,500) for both you and your spouse. There is a very short time for this to be helpful for your 2013 taxing status.
Increase your contributions to this type of Tax Deferred Plan Immediately.

Then you may want to go back to a normal contribution in January 2014.

When your employer has a retirement plan, and you have high income, you may not be able to make a tax deferred contribution to an IRA.
When you file Married Filling Jointly, and your MAGI for 2013 is $95,000 the deduction begins to be phased out. When your MAGI for 2013 is $115,000 or more there is no deduction for a contribution to a Traditional IRA.

You can always invest the money in a taxable investment account. It will not avoid the taxation, but can help to secure your future.
Post Thu Oct 31, 2013 6:29 pm
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oldguy
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quote:
We recently came into some money and paid off all of our debt including house, cars, etc. We have a chunk left over and our looking for advise on the best management of it.


Our answers may have been different if you had asked before you used the money to clear your debts.
The average lottery winner goes broke in about 7 years - it turns out that most people are conditioned to handle monthly income - so they intuitively apply that same logic to lump sums of cash.

If you can share some numbers maybe we can add some ideas. Very Happy
Post Fri Nov 01, 2013 2:28 pm
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