On various occasions we’ve discussed the benefits of segregating different assets in separate Roth IRAs when doing a conversion. A reader asks whether it would be possible to achieve the same benefit, or at least a similar one, with assets that were initially converted to a single Roth IRA that was subsequently divided. (more…)
Archive for December, 2010
Segregate Assets After Roth Conversion?
Saturday, December 11th, 2010Q&A on the Tax Deal
Friday, December 10th, 2010Here are key points of the tax deal that was signed into law December 17, 2010. (more…)
Inside the Tax Negotiations
Friday, December 10th, 2010Brer Fox finally captured his tormentor, Brer Rabbit. “I’ll tie you up and roast you,” he said.
“Roast me all you want, just don’t make me cut taxes for everybody,” a quivering Brer Rabbit replied.
“There’s nothing here to tie you, so I’m going to drown you.”
“You can drown me, do anything you want as long as you don’t make me cut taxes for everybody!”
“There’s not enough water to drown you, so I’m going to do the thing that will hurt you most.”
So Brer Fox flung Brer Rabbit into the brier patch, but not before making him give a big tax cut to everyone in the land.
The Tax Deal: Rethink Roth Conversions?
Thursday, December 9th, 2010It’s going to be quite a scramble to figure out what planning moves make sense in light of a suddenly changing tax landscape. One item sure to draw the attention of many is Roth conversions. Will they become more attractive? Or possibly, for some people, less attractive? (more…)
Portability for Estate Tax Exemption?
Wednesday, December 8th, 2010There’s a hint in press reports about the deal being struck on tax legislation that it may include portability for the estate tax exemption. The idea has been around at least since 2008. Here’s what we said about it then. (more…)
Interest rate update
Wednesday, December 8th, 2010The IRS has announced interest rates for tax underpayments and overpayments (also used for figuring the penalty for underpayment of estimated tax) for the first quarter of 2011. The main rate has gone down, from 4% to 3%. These rates, along with many other figures, can be found in our Reference Room.
Sell Those Bonds
Monday, December 6th, 2010Here’s a tax-saving strategy for people who hold appreciated bonds (other than municipals) in a taxable account: sell them, and buy them back. What? Pay tax on my profit now instead of later? Yes. Pay now so that you won’t pay more — possibly a lot more — later. In the right situation, this strategy can pay handsome dividends, even when tax rates are not going up. Any additional savings from avoiding a rate increase are gravy. (more…)
Mileage Rates for 2011
Friday, December 3rd, 2010The IRS has announced standard mileage rates for automobile use in 2011:
- For business use, 51 cents per mile, with 22 cents per mile being treated as depreciation (reducing the basis of the vehicle)
- For medical or moving use, 19 cents per mile
- For charitable use, 14 cents per mile
These figures and many more are posted in our Reference Room.
Sophisticated Roth Conversion Planning
Thursday, December 2nd, 2010Suppose you could make a double or nothing bet with your retirement account. That’s not likely to make a lot of sense, given the possibility of losing the bet. But suppose you could bet half your retirement account on some proposition, and bet the other half on the opposite proposition. Does that sound like a pointless exercise? An intriguing article by UNC law professor Gregg Polsky explains how such an arrangement could be used to cut the tax cost of a Roth conversion. (more…)
Other voices
Thursday, December 2nd, 2010- If you’re looking for a primer on tax loss harvesting, visit this article on William Baldwin’s blog at Forbes.com.
- Bill Bischoff’s “Tax Guy” column for SmartMoney provides a nice overview of custodial accounts for minors.
Both were kind enough to mention resources available here at Fairmark.com.
