| Social security tax on a roth? |
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marathon don
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| Social security tax on a roth? |
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I am getting ready to roll from a traditional IRA to a Roth and will have to pay 33% in Fed taxes.
It is my understanding that SS taxes are on wages and not on this rollover. I am correct? If they do pertain to this rollover are they included in the 33% tax or do I pay seperately and how?
Just trying to avoid any penalty for under payment of SS tax. I've never heard of one.
Thanks in advance,
MD
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Tue Dec 09, 2008 3:41 am |
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BlankenshipFP
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coaster is absolutely correct about the OP's question. Not to pick nits, I just wanted to clarify something about the language: OP is going to perform a "conversion" from a trad IRA to a Roth IRA, not a "rollover". The two activities are vastly different in their tax treatment.
We now return you to your regular programming...
Jim Blankenship, CFP�, EA
Blankenship Financial Planning, Ltd.
www.BlankenshipFinancial.com
Standard IRS Circular 230 Notice Applies
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Tue Dec 09, 2008 2:13 pm |
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BlankenshipFP
Money Talk Advisor
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It's your forum. 
Jim Blankenship, CFP�, EA
Blankenship Financial Planning, Ltd.
www.BlankenshipFinancial.com
Standard IRS Circular 230 Notice Applies
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Tue Dec 09, 2008 3:19 pm |
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BlankenshipFP
Money Talk Advisor
Cash: $ 79.56
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I just meant that you seem to have a good grasp on everything going on in this forum, you nearly "own" it.
I haven't checked out the Bill Sebastian forum - who is Bill Sebastian (no slight intended)?
Jim Blankenship, CFP�, EA
Blankenship Financial Planning, Ltd.
www.BlankenshipFinancial.com
Standard IRS Circular 230 Notice Applies
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Tue Dec 09, 2008 7:05 pm |
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oldguy
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quote:
I am getting ready to roll from a traditional IRA to a Roth and will have to pay 33% in Fed taxes.
Not part of your question - but why on earth would you convert a Trad IRA to a Roth while you are in a 33% tax bracket?? Plus your state income tax? Likely another 5% to 7%?
You don't have to pay tax on this until age 70 1/2, you can let the whole fund compound - then at age 70 1/2 you can sell a little each year probably for 15%.
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Mon Dec 15, 2008 1:52 am |
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oldguy
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quote:
A lower tax rate but at a higher gain might net out to more later.
It would be a mistake to look at minimizing the taxes - look at maximizing what is left for you after taxes.
I would keep the IRA, leave that 40% invested inside the IRA, let it double or triple over the next decades, and then pay about 15% on it when I have to sell my RMDs (which I now have to do).
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Mon Dec 15, 2008 2:36 pm |
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marathon don
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My email gave me no indication this thread was on going and I appreciate the replies.
Tim thanks for the reply you posted weeks ago.
To answer oldguy. I did the conversion based on current and projected economic and political events. I have what I hope to be several more working years ahead of me. I am of the mindset to pay taxes on the seed (after tax contributions) and not the harvest (tax free gains). Meaning I much rather pay tax on 5K in wages than taxes on a possible 100k gain. That’s the way I’m looking at it.
And btw, does anyone have a recommendation on a good country to move to for at least four years? 
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Wed Dec 17, 2008 3:09 am |
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oldguy
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quote:
Meaning I much rather pay tax on 5K in wages than taxes on a possible 100k gain. That’s the way I’m looking at it.
It doesn't work that way. You are giving up $2000 to taxes, and leaving only $3000 to grow to $60,000. If you left the whole $5000 to grow it would be $100,000 with $15,000 due in taxes, ie $85,000 net (better than $60,000 net).
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Wed Dec 17, 2008 10:46 pm |
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