Yellow | Yet Another Bankruptcy Court Hearing Scheduled On Yellow Corp/Pension Plans Withdrawal Liability

[EX396]

By the way, I can't quite imagine where you could satisfy an RMD by just using the dividends, I just don't think the math works out. Your investments would have to be paying an unusually large dividend rate for that to happen. I could be wrong though.

I'm suggesting the scenario where you can live off the dividends.

Transferring shares from a retirement account to a non-retirement account in sufficient quantity to satisfy the RMD isn't really selling shares unless you need to sell additional shares to satisfy tax liability of the RMD.

The historical dividend yield on VEIRX, for example, has been enough to satisfy RMD up to average male life expectancy.

 

[Triplex]

I'm suggesting the scenario where you can live off the dividends.

Transferring shares from a retirement account to a non-retirement account in sufficient quantity to satisfy the RMD isn't really selling shares unless you need to sell additional shares to satisfy tax liability of the RMD.

The historical dividend yield on VEIRX, for example, has been enough to satisfy RMD up to average male life expectancy.

Never mind what I said about RMD's not being satisfied by dividends alone. Foggy thinking on my part. Of course investments can have dividend returns greater than the RMD's. This is exactly what's been happening with my own 401-K's and IRA's where they have been growing (with dividend reinvestment) in amounts greater than my RMD's. Maybe I didn't have enough coffee yet.

 

[Triplex]

Hate to say it but I think I should buy Saia shares (or should have yesterday).

$528.71 +$61.26 (+13.11%)

 

[dokman]

Depends on how much that earned income is.

I haven't been able to take advantage of a ROTH for a long time. Even if I could, I'm not certain that the government isn't going to change course some day and decide all those gains are taxable. Before you scream, "impossible there would be a civil war!" Please consider you have a large percentage of the population that believes we should tax wealth in addition to income. Don't under estimate the political pressure to tax those with to the benefit of those without.

I believe my effective tax rate while working will prove to have always been higher than in my retirement years. I'd rather pay a smaller percentage of a larger number than a larger percentage of a smaller number, even if the numbers work out the same. The law of commutative property.

For high wage earners there is a method called a back door roth.

 

[EX396]

Yikes!

I tend to shy away from individual stocks as I feel those professional money managers are going to do a better job over the long haul than I can. They are paid to pay attention all day everyday and I don't want to do that. Besides, unless I feel that I have close to insider-trading level information on a particular stock I'm not risking it.

 

[EX396]

For high wage earners there is a method called a back door roth.

Yes, and I may reconsider that when my effective tax rate is lower. As of now, I'm not volunteering to give Uncle Sam such a huge percentage when I may be able to covert at a later time.

 

[dokman]

There are lots of "angles" to consider before making that kind of decision though. Even the experts disagree about if it's a good idea depending on one's circumstances. Either way there's going to be a tax consequence.

I understand what you are saying. My concern is waiting until RMD is required and the amount bumps you into next tax bracket. I would rather start pulling some out early and putting it in other places to avoid higher tax. Unless things change Trumps tax rates will sunset it 2026 so there is more to think about. 401 k money is taxed as ordinary income, capital gains on a regular brokerage account and dividends are taxed at a lower rate.

 

[Triplex]

I understand what you are saying. My concern is waiting until RMD is required and the amount bumps you into next tax bracket. I would rather start pulling some out early and putting it in other places to avoid higher tax. Unless things change Trumps tax rates will sunset it 2026 so there is more to think about. 401 k money is taxed as ordinary income, capital gains on a regular brokerage account and dividends are taxed at a lower rate.

Being bumped into a higher tax bracket when I take my RMD's means I've had lots of growth in my 401-K/IRA "nest egg" and my distributions are "paying" me a pretty high "salary" for not working. Paying higher taxes just means I'm making a lot more money. I really don't have a problem with that.

(I'd love to be paying a million dollars in taxes. Just imagine what my gross income would have to be for that to happen.)

 

[EX396]

401 k money is taxed as ordinary income, capital gains on a regular brokerage account and dividends are taxed at a lower rate.

Ordinary income rates are not always higher than capital gains rates. Short term are the same.

A married couple aged 75 has an RMD of 4.07%. They would need more than $2.5M in their 401(k) to have the RMD put some of that income in a tax bracket higher than 15%. Which is what their LTCG rate would be.



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[EX396]

(I'd love to be paying a million dollars in taxes. Just imagine what my gross income would have to be for that to happen.)

Not that I pay anywhere near $1M in taxes I used to say the same thing. However, there comes a point where the percentage they take pisses you off more than the dollar amount.

In CALIFORNIA you have 49.3% in Fed and State income taxes in the top bracket. Plus 7.65% additional on your first $168,000, then 1.45% on everything over $200,000. Whatever's left that you spend is going to have 7-10% ish sales tax depending on where in the state you live.

 

[dokman]

Ordinary income rates are not always higher than capital gains rates. Short term are the same.

A married couple aged 75 has an RMD of 4.07%. They would need more than $2.5M in their 401(k) to have the RMD put some of that income in a tax bracket higher than 15%. Which is what their LTCG rate would be.



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Not sure your math is correct 2.5 mil x 4.07 is 117,500. Married filing joint is 89,450 and above is 22% below is 12%.

 

[EX396]

Not sure your math is correct 2.5 mil x 4.07 is 117,500. Married filing joint is 89,450 and above is 22% below is 12%.

No, the tax bracket for 2024 married filing joint is 94,300 and only the taxable amount above 94,300 is taxed at 22%. The taxable amount between 11,600 and 41,750 is taxed at 12%, the amount below 11,600 is not taxed.

 

[dokman]

No, the tax bracket for 2024 married filing joint is 94,300 and only the taxable amount above 94,300 is taxed at 22%. The taxable amount between 11,600 and 41,750 is taxed at 12%, the amount below 11,600 is not taxed.

Okay I used 23 rate and your original post had 117,000 for a couple.Point is if I can pull some out early and avoid bumping into the next bracket. Remember teamsters pension will be taxed so that raises the bar. I fully understand the tax brackets and how it works

 

[EX396]

Okay I used 23 rate and your original post had 117,000 for a couple.Point is if I can pull some out early and avoid bumping into the next bracket. Remember teamsters pension will be taxed so that raises the bar. I fully understand the tax brackets and how it works

Did you forget to take the $29,200 std deduction?

94,300 + 29,200 = 123,500 / .0407= 3,034,398 which is "more than $2.5M" as I stated in my original post on the subject.
I didn't use a calculator in my original post and just spit-balled the approximation.

On that note I neglected to account for up to the first 123,500 in LTCG not being taxable for a married couple filling jointly.

So, while the bracket rates are lower the fact that the first 123,500 in LTCG is not taxable while only the first 40,800 of income is not taxable changes things. Carry on.

 

[dokman]

Did you forget to take the $29,200 std deduction?

94,300 + 29,200 = 123,500 / .0407= 3,034,398 which is "more than $2.5M" as I stated in my original post on the subject.
I didn't use a calculator in my original post and just spit-balled the approximation.

On that note I neglected to account for up to the first 123,500 in LTCG not being taxable for a married couple filling jointly.

So, while the bracket rates are lower the fact that the first 123,500 in LTCG is not taxable while only the first 40,800 of income is not taxable changes things. Carry on.

Not sure where you got the 123,500 for cap gains.

 

[EX396]

Not sure where you got the 123,500 for cap gains.

In 2024 long term cap gains rate for married couple filing jointly is 0% up to $94,300*

29,200 is standard deduction for married couple filing jointly in 2024.

29,200+94,300= 123,500.

*I've seen 94300 and 94050 figures, not sure which is correct. I haven't looked on the IRS site.

 

[Homesick]

Preston did the same thing. Allowed Teamsters into the 401K plan. No matching funds but the company paid all the fees. What do you want, lifetime pensions and a company match?

Well yes! I want as much as I can get but I'll settle for what I earn. As you have pointed out many times, we are Teamster's and we want it all. Just keep in mind that having all your retirement money in one asset class at age mid 70's may not be your best option but it is your money.

 

[dokman]

Being bumped into a higher tax bracket when I take my RMD's means I've had lots of growth in my 401-K/IRA "nest egg" and my distributions are "paying" me a pretty high "salary" for not working. Paying higher taxes just means I'm making a lot more money. I really don't have a problem with that.

(I'd love to be paying a million dollars in taxes. Just imagine what my gross income would have to be for that to happen.)

I agree Tri, my thoughts are forward looking to stay ahead of the tax man. I have a few years left to contribute and several until RMD time. If I can pull from a tax deferred account and move to another “vehicle “ to avoiding getting into a higher bracket then I plan too.

 

[skullcramp]

I know trip but the other day a guy called and told me one of our guys was being picky and is still out of work and getting himself into a bad situation. So I called the guy and tried to explain that he needed to knock it off and told him about a few jobs he could apply for. Then wondered how many guys are still unemployed, regardless of the reason. I thought how much they could use the payment for their unused PTO.

Although I know it won’t happen. Yellow has gotten a lot of money from the property sales they should cut those checks now.

I’d bet they’ve cut plenty of checks to Darren, Darrel, Matt Doheny etc. probably some money sloshing around but now they’re out of checks. It’s always something.

 

[Real Teamster]

In 2024 long term cap gains rate for married couple filing jointly is 0% up to $94,300*

29,200 is standard deduction for married couple filing jointly in 2024.

29,200+94,300= 123,500.

*I've seen 94300 and 94050 figures, not sure which is correct. I haven't looked on the IRS site.

How refreshing it is to me to read some very intelligent subject matter on this board instead of the usual neanderthal gibberish. Thanks, guys!!