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Leon Trotsky 2012 posted:Also, I didn't know that she only had 3k in savings before buying a house and it is all in savings bonds or that her fiance cashed out the IRA to pay for the termite damage and bought a new car. It was just an update and a confirmation that they went through with all of it and are going through with the wedding loan. I think you have to cash out IRA's you get as inheritance. The IRS gives you a year to cash it out. Which is unfortunate because can you even imagine the compounded interest from a 50 year old IRA. It also means you have to pay taxes on inheritance, which isn't the case when it's cash assets.
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Jul 28, 2016 15:03
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No, you're not required to cash out an IRA within a year. There are requirements to make sure that IRAs can't grow indefinitely, but generally speaking, they require a non-spouse beneficiary to take annual required minimum distributions based on their own age. For a relatively young beneficiary, the RMDs will be fairly small - almost certainly in the single-digit percentage range. See https://www.irs.gov/retirement-plans/required-minimum-distributions-for-ira-beneficiaries for the rules or http://www.schwab.com/public/schwab/investing/retirement_and_planning/understanding_iras/ira_calculators/beneficiary_rmd to play with graphs and numbers. Cash assets are already taxed; traditional IRAs aren't. There's no additional tax on inherited money in either case (assuming you're not so rich you have to worry about the estate tax), but the IRS isn't going just forget about the tax deferment because the IRA passed through an estate.
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Jul 28, 2016 15:39
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Space Gopher posted:No, you're not required to cash out an IRA within a year. There are requirements to make sure that IRAs can't grow indefinitely, but generally speaking, they require a non-spouse beneficiary to take annual required minimum distributions based on their own age. For a relatively young beneficiary, the RMDs will be fairly small - almost certainly in the single-digit percentage range. See https://www.irs.gov/retirement-plans/required-minimum-distributions-for-ira-beneficiaries for the rules or http://www.schwab.com/public/schwab/investing/retirement_and_planning/understanding_iras/ira_calculators/beneficiary_rmd to play with graphs and numbers. Maybe I misread it as cash out the proceeds within a year rather than start disbursements within a year, but over 5 years. I know I read somewhere that you have a year to start withdrawing funds. Since I will be the executor for an estate that's 3/4th IRA I probably need to figure this poo poo out. Fortunately most of the heirs are really bad with money so it's not like it matters.
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Jul 28, 2016 16:04
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Not a Children posted:To some people, 6 figures == unlimited money. Too bad there are entire industries dedicated to sucking out windfalls. My brother-in-law died a few years ago and my sister ended up with somewhere around $600k in life insurance money (gogo military life insurance (he died in a single-vehicle drunk driving accident, not in combat)). It took me a while to convince my dad that, no, she was not "set for life" and while a very nice windfall/nest egg, that was not the kind of money that allows someone to not work anymore. Luckily he learned that before receiving his own six-figure worker's comp settlement a few years later.
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Jul 28, 2016 17:31
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Krispy Kareem posted:Maybe I misread it as cash out the proceeds within a year rather than start disbursements within a year, but over 5 years. I know I read somewhere that you have a year to start withdrawing funds. Since I will be the executor for an estate that's 3/4th IRA I probably need to figure this poo poo out. You have to start taking age based required minimum distributions on or before the last day of the calendar year following the death of the account owner. You can also choose to take equal payments over five years if you are already old or just BWM. Taxation varies depending upon whether the contributions were originally made pre or post tax. Also, a critical point is that IRA and 401k type accounts are beneficiary accounts that pass directly to named beneficiaries and are not part of the estate, unless you don't name any beneficiaries. That's one of the most important powers of retirement savings accounts, is they bypass months of probate in the court system and protect your money from creditors even after you die.
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Jul 28, 2016 17:39
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Ornamented Death posted:My brother-in-law died a few years ago and my sister ended up with somewhere around $600k in life insurance money (gogo military life insurance (he died in a single-vehicle drunk driving accident, not in combat)). It took me a while to convince my dad that, no, she was not "set for life" and while a very nice windfall/nest egg, that was not the kind of money that allows someone to not work anymore. It can be, just not if they were living 100k a year lifestyles.
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Jul 28, 2016 17:43
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Nail Rat posted:It can be, just not if they were living 100k a year lifestyles. Not at 25, unless you plan on dying young. Also not when you have a kid under five. They were also living well beyond their means trying to "keep up with the Joneses" (the Joneses being my wife and I).
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Jul 28, 2016 17:48
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Nail Rat posted:It can be, just not if they were living 100k a year lifestyles. You'd be living on about $20000 for your entire life and ineligible for social security and Medicare, not sure that's a great proposition. Unless you lived in a very rural location such as Des Moines.
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Jul 28, 2016 18:14
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My coworker asked me if she could withdraw her 401k money because she wanted to 'do something else' with it. I said she'd probably get hit with her tax rate plus an early withdrawal penalty if she cashed it out. She seemed disappointed. No clue what she wants to do with the money, but when prompted she said she wanted to 'put it in something else'. Here's hoping it's not gold, bitcoin, or horses.
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Jul 28, 2016 18:51
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I would love to see some stats on what the most common 401k events are when a person leaves their job, as far as -leaves it with former employer -rolls over to new employer -rolls over to IRA -cash that poo poo OUT baby it's FREE MONEYYYY
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Jul 28, 2016 18:59
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Tales Of Desire posted:My coworker asked me if she could withdraw her 401k money because she wanted to 'do something else' with it. I said she'd probably get hit with her tax rate plus an early withdrawal penalty if she cashed it out. She seemed disappointed. No clue what she wants to do with the money, but when prompted she said she wanted to 'put it in something else'. Here's hoping it's not gold, bitcoin, or horses. If she's young, 75% horses 25% bitcoin. If she's middle aged, even money on horses and gold. DIVERSIFICATION.
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Jul 28, 2016 19:05
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BEHOLD: MY CAPE posted:You'd be living on about $20000 for your entire life and ineligible for social security and Medicare, not sure that's a great proposition. Unless you lived in a very rural location such as Des Moines. Caveat: it's possible if you have a paid-off home. Then it becomes fairly reasonable unless you're a world traveler or need new cars.
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Jul 28, 2016 19:47
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Nail Rat posted:Caveat: it's possible if you have a paid-off home. Then it becomes fairly reasonable unless you're a world traveler or need new cars. Reasonable by BWM, live like a loving miser standards I guess. The first time you have a major medical situation, you are essentially hosed. I mean, seriously, most reasonable estimates for what you need in a 401(k) account are well north of a million dollars, and that's generally assuming you're going to stop working in your 60s and are mostly debt free. Anyone trying to retired well before 60 on $600k is going to have a miserable, boring life. I guess it's GWM if you're their inheritor and can convince them to do it because you'll be getting a nice chunk of change after they kill themselves from boredom inside of ten years. Ornamented Death fucked around with this message at 20:22 on Jul 28, 2016 |
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Jul 28, 2016 20:17
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I'd call 600k life changing because it's a front-loaded 10+ years worth of full-time savings. Of course, you still need to work, but that work can now be part-time barista saving 20% of income instead of full-time business management saving 50%. Or you retire 10 years earlier, whatever.
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Jul 28, 2016 20:50
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I don't think anyone is disagreeing that 600k is a life-changing amount of money. It's just that it's not "set for life" money in and of itself when you're in your 20s or 30s unless you really want to live like a pauper in the middle of bumfuck nowhere for the rest of your life. However, inheriting 600k and using it wisely can nearly guarantee that you end up set for life a hell of a lot sooner than you otherwise would be.
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Jul 28, 2016 20:53
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Ornamented Death posted:I mean, seriously, most reasonable estimates for what you need in a 401(k) account are well north of a million dollars There are catastrophic-only high deductible medical plans you can sign up for 1-200 a month, more or less designed for doing contracting, that can cover your medical. Obamacare made it cheaper than it used to be. E: sticking that 600k in vanguard retirement funds for 10-11 years @ 5% interest gets you your 1M btw Bhodi fucked around with this message at 20:58 on Jul 28, 2016 |
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Jul 28, 2016 20:55
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Guinness posted:I don't think anyone is disagreeing that 600k is a life-changing amount of money. It's just that it's not "set for life" money in and of itself when you're in your 20s or 30s unless you really want to live like a pauper in the middle of bumfuck nowhere for the rest of your life. This was my point. Fun fact, the military has financial counselors specifically for situations like this because the bereaved are very likely to blow through the money in a year or two.
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Jul 28, 2016 21:17
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Do you have 12k in the bank? Do you make $1700 a month? Then why not buy a $110k house and GET ON THE PROPERTY LADDER! https://www.reddit.com/r/personalfinance/comments/4v2pxv/i_have_12k_in_the_bank_and_just_made_an_offer_on/ quote:So I have $12k in my bank account (actually a little more but I'll need that shortly) An offer on a house was accepted by the sellers yesterday. I am going to be using the RD financing which is 100% financing. I plan on paying closing costs, inspector fees, and the RD loan fee out of the 12k. I expect all that to be around 4-5k when it's all said and done. That will leave me with 7-8k left. My question is do I take that and use it as a down payment to lower my financing and therefor my payments? Or is that amount of money just better off being stashed away for an emergency/moving in costs fund. As it looks now I'll be financing 104k. I have no other debt as of now and I'm staring my full time career with the first paycheck coming in on August 20, with a take home pay of around 1700/month.
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Jul 28, 2016 21:45
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After taxes, insurance, and PMI, he's looking at about half of his take home going to the house payment. That's going to be a rough few years until he can get his take home up.
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Jul 28, 2016 21:54
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Nail Rat posted:Do you have 12k in the bank? I love how so many house buying stories start with "I'm under contract, how should I pay for this?"
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Jul 28, 2016 22:29
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H110Hawk posted:I love how so many house buying stories start with "I'm under contract, how should I pay for this?" Well every nanosecond I spent prior to buying I was renting, and that's just throwing money away!
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Jul 29, 2016 00:25
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H110Hawk posted:I love how so many house buying stories start with "I'm under contract, how should I pay for this?" Jebus, if his full time job paycheck doesn't come in Aug 20, who's approving him with limited or no provable income right now?
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Jul 29, 2016 00:26
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It's ok, he has his wife's income too, she just can't be on the loan because of terrible credit. 
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Jul 29, 2016 01:22
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This isn't unique or quirky. Just classic awful financial decisions.quote:I used to make a solid six-figure salary. Ignored the lifestyle creep, then got laid off. Made the mistake of taking a security job in order to have some income while I looked for more work, now that ended up kicking me in the butt by making employers think something's up with me. /endrant
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Jul 29, 2016 02:37
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Nail Rat posted:Caveat: it's possible if you have a paid-off home. Then it becomes fairly reasonable unless you're a world traveler or need new cars. Lol so in other words, retiring on $600k is fairly reasonable as long as you have a house worth some hundreds of thousands of dollars in addition to the $600k, gotcha.
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Jul 29, 2016 02:39
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Switchback posted:This isn't unique or quirky. Just classic awful financial decisions. The age really makes this taste so much sweeter I am 27 and have no idea how to even make this happen
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Jul 29, 2016 02:40
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Mocking Bird posted:The age really makes this taste so much sweeter Sometimes I get stressed out about being 30 and only now really beginning to save for retirement. Then I realize I'm going to be ok.
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Jul 29, 2016 03:15
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How the gently caress is it even possible to owe over $50k in back taxes at 27? I could see it if he dodged taxes for a decade, but it's only been two or three years. Did he set his allowances to some made up insanely high amount and then just never file taxes? Even if he did that, how did he end up owing so much in such a short amount of time?
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Jul 29, 2016 04:21
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Leon Trotsky 2012 posted:How the gently caress is it even possible to owe over $50k in back taxes at 27? I could see it if he dodged taxes for a decade, but it's only been two or three years. 2 years @ $120k ("solid 6 figures") w/ exempt checked = $50k owed. Mind you, any payroll department worth their salt would try and talk you down from an exempt W-4. Same scenario with a $165k salary (big law associate starting salary) and high exemptions.
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Jul 29, 2016 04:26
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High income + back taxes + underpayment penalties? Efb
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Jul 29, 2016 04:27
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H110Hawk posted:2 years @ $120k ("solid 6 figures") w/ exempt checked = $50k owed. Mind you, any payroll department worth their salt would try and talk you down from an exempt W-4. Same scenario with a $165k salary (big law associate starting salary) and high exemptions. Yeah, there was only one thing it could have been. I meant it semi-rhetorically. Why would someone who is making solid 6 figures have set their withholding to 0 and not file taxes for years? Obvious answer is: BWM. But he had to actively sabotage himself to do that. If he literally did nothing he would be in great shape.
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Jul 29, 2016 04:43
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Also suspect he went big law to doc review and wound up with a dead resume. That could look bad.
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Jul 29, 2016 05:04
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hi thread i am bad with money
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Jul 29, 2016 07:57
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I live paycheck to paycheck, have no savings whatsoever, a 401k with about 3 grand in it that I don't contribute to anymore, and I'll have to take out a cash advance from my credit card just to pay my rent this month. But I'm almost definitely gonna buy a $1200 video card for my computer pretty soon.
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Jul 29, 2016 12:16
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Leon Trotsky 2012 posted:How the gently caress is it even possible to owe over $50k in back taxes at 27? My guess is working as an independent contractor.
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Jul 29, 2016 14:51
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Monday_ posted:I live paycheck to paycheck, have no savings whatsoever, a 401k with about 3 grand in it that I don't contribute to anymore, and I'll have to take out a cash advance from my credit card just to pay my rent this month. Welcome home, friend.
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Jul 29, 2016 15:17
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darkwasthenight posted:Welcome home, friend. The funny thing is I was treasurer of a club in college and left a huge surplus when I graduated.
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Jul 29, 2016 15:24
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H110Hawk posted:2 years @ $120k ("solid 6 figures") w/ exempt checked = $50k owed. Mind you, any payroll department worth their salt would try and talk you down from an exempt W-4. Same scenario with a $165k salary (big law associate starting salary) and high exemptions. One year as a contract worker making $150k will most likely get you there with penalties.
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Jul 29, 2016 15:40
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Monday_ posted:I live paycheck to paycheck, have no savings whatsoever, a 401k with about 3 grand in it that I don't contribute to anymore, and I'll have to take out a cash advance from my credit card just to pay my rent this month. how's your candle budget looking?
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Jul 29, 2016 15:45
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BraveUlysses posted:how's your candle budget looking? Through hard sacrifice I've cut back to a lean $3500.
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Jul 29, 2016 16:25
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