Taxable Income Retirement
Question: How can you transfer $500,000 from a taxable equities(stock) account, to a lower taxed retirement account?
Heres the situation:
My unemployed (retired) 58 year old father has about 500k in a Schwab account. He owns his house outright has no write-offs. He will start receiving a pension type retirement income when he turns 65.
When he needs money he sells some stock and gets killed on his taxes. Nearly the entire schwab account is filled with stocks that were bought at substantially lower levels, so when he sells it is all capital gains.
Question? What is the easiest way to transfer some of these volatile stocks into some income generating, capital preserving, index or bond funds that will give my father approximately 50,000 a year for 8 years until his retirement kicks in?
Answer: You can’t transfer those to a retirement account. Only earned income can be salted away in retirement accounts and capital gains are not earned income. Since he has no earned income this isn’t an option.
Capital gains are already taxed at some of the lowest tax rates, as low as 0% for 2008 and 2009 and no more than 15%.
You should cull through the lists of the securities that are in the account and rank them according to the potential capital gains, from least to highest. Then sell off enough of them with the lowest total gain to keep him in the 15% tax bracket. That way, no tax will be due in 2008 or 2009. Move those funds to something less volatile if income and capital preservation are a priority. Dump anything with a capital loss as well and offset that with gainers as they cancel each other out nicely.
Even if you cashed out the entire account and it was ALL gains, the worst case tax bite would be $75,000. That would still leave $425,000 which is plenty to cover $50,000 per year for 8 years. Since it’s unlikely that his basis in any of the securities is $0, the gain will be less than the total value of the account so the total tax will be less than $75k.
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Question: I am61yrs old and have NSS87 account. Can i draw entire balance without taxI am retired now and no taxable inc?
It was allalong told that drawal from NSS1987 attracts TDS of 20% if drawn before retirement or 60 years. Now can i DRAW THE balance in my account as I am retired and 61 now with no Taxable Income What is the procedure and rule by which it can be claimed as Post offices are not conversant. Pl give with specific circular reference. Thanks
Answer: yes you can withdraw it you approach the post office where the account is maintained they will guide you
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Question: Do you pay taxes on lump sum received from ex husband for his retirement?
My fiance received a large lump sum, in the form of a cashiers check, from her ex husband after he retired. Is that Taxable Income? taxable gift? She says since it was in the divorce decree that she receives a certain percentage of his retirement that it would be considered alimony. Since he always pays in cash or check, where would she place the income on the tax files if no tax forms are ever sent out to her, ie: 1044 etc.
Answer: can’t be a qdro…that would have to have been enforced prior to the distribution. And the distribution would have to be made directly to her from the trust.
As for alimony? Totally depends on what the divorce decree states as per future payments and the payment of that retirement. This is really up to an attorney who would need access to the divorce decree. But I would guess if the document says something along the lines of she is to recieve $600/mth for life then it’s a taxable gift. But if it says $600/mth for life PLUS a portion of ex’s retirement then it can be considered alimony.
But that’s just an opinion that has no legal standing or support.
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Question: I received an adjustment on my Tax Refund. Why?
I don’t understand.
I just received a noticed from the Commonwealth of Massachusetts Department of Revenue, adjusting my refund. It went from being $139.00 to $29.78.The reason given: “Amount of refund was reduced due to offset to another period”.
What????
Answer: “offset to another period” means you owed them on 2008, 2007, etc.
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