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Putting all my current income in Retirement accounts

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Boydfred
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Putting all my current income in Retirement accounts  Reply with quote  

I have some cash in a taxable account from downsizing my residence. I am currently employed as a teacher. I have enough available retirement vehicles to put my entire w-2 income this year into retirement (I'm 54 and my 403b is a 103b right now). I would live on the house proceeds. I think this would minimize income tax bite. Am I missing something? Why isn't this a commonly mentioned strategy for those of us with taxable savings and income?
Post Sat Nov 02, 2013 6:28 pm
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clydewolf
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Re: Putting all my current income in Retirement accounts  Reply with quote  

quote:
Originally posted by Boydfred
I have some cash in a taxable account from downsizing my residence. I am currently employed as a teacher. I have enough available retirement vehicles to put my entire w-2 income this year into retirement (I'm 54 and my 403b is a 103b right now). I would live on the house proceeds. I think this would minimize income tax bite. Am I missing something? Why isn't this a commonly mentioned strategy for those of us with taxable savings and income?

First, you may want to set aside about 6 months of living expenses for an emergency fund.

And WAIT,,,, You do have a good idea, but you also have some tax free income in the form of your Standard Deduction and Personal Exemption. Do not put that amount into your tax deferred account for 2013, - Wait until 2014 to put that amount into your tax deferred account. That will help to minimize your income tax for 2014 too.

It is not clear when you downsized your home. Was this a sale?
When you sell your primary residence, and lived in the home for24 months in the 60 months prior to the sale, you can have a tax free gain of up to $250,000 ($500,000 for those that file MFJ).
See IRS Pub 523 Selling Your Home: http://www.irs.gov/pub/irs-pdf/p523.pdf
Post Sun Nov 03, 2013 12:22 am
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