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Messages - nothing_twisted

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Taxes / Re: tIRA Fund Inefficiency
« on: January 16, 2018, 12:45:54 PM »
Much appreciated!

Taxes / Re: tIRA Fund Inefficiency
« on: January 15, 2018, 10:06:36 AM »
Thanks so much for the speedy reply!

- the taxable portion is pro-rated over ALL of your Traditional IRAs. If total pre-tax IRA value is large (perhaps because you transferred an old employer's 401k to a TIRA), then almost all of conversion would be taxable. The way around this is to first transfer the other IRA assets to your employer's 401k (if allowed) or to your side hustle solo 401k.

Could you explain this further for me? If my total tIRA balance is relatively low is there a chance some of it won't be taxable? I'm not completely clear what you mean by the taxable portion being pro-rated.

Taxes / tIRA Fund Inefficiency
« on: January 15, 2018, 06:27:12 AM »
Hey, Jeremy!

First off, thanks for all the amazing content.

This year my wife and my income was in the phase-out range for contributing to our Traditional IRA's. As I expected this, I have been waiting till tax time to figure out exactly how much will be tax deductible, which means we missed out on the stellar gains we saw in 2017.

Is there a more efficient way to do this for 2018? Is it possible to contribute to the tIRA for the full amount and then convert the non-tax deductible portion to a Roth without negative tax consequences? I felt that contributing the funds to a taxable account and then selling them when I found out how much I could contribute would be tax deductible would be counterproductive, as that would increase our income in either 2017 or 2018, reducing the amount that would be deductible in addition to triggering Short-Term Capital Gains.

Likelihood is that we may be in the same situation this year, although I don't want to rule out the possibility that we might make even more money. ;)


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