Two no-brainer finance moves nobody told me when I was in my 20s or 30s, that would have saved me hundreds of thousands in taxes - here they are:
1)Convert your IRA into a Roth IRA. ESPECIALLY DO THIS if Trump manages to lower tax rate for wealth .. because when you convert, your IRA is added to your income and you are taxed at that rate. (This assumes your IRA investments are performing well.. mine did.) Generally speaking, taxes over 20-30 years are unlikely to go down from todays levels.*
2)When saving for college, use a 529 plan. Wisconsin is a good state to do it in. Have a relative in wisconsin you trust? give them the money (up to 14,000 a year tax free) and have them give to your child - you are giving them a free tax break! If they're a really generous relative, they'll give the money saved in taxes to your child on top of your gift. :)
- I would have 70% more useable retirement money now if I had done this. Reason? My self directed retirement investments did really well. Turned ~30k invested in 2002-2004 into substantially more (apple, nvidia, solar city, tesla) in todays
** If trump lowers taxes for the rich, this could help middle america in conversions to roth IRA as it increases your income the year it happens.. so timing is key - perhaps next year?
*** If the market has a major 2008 downturn, it's also a good time to do this .. again.. timing is everything.
October 07, 2017 at 08:43AM
