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This is the most expensive time to buy stocks in 20 years
This is the most expensive time to buy stocks in 20 years
New York(CNN Business)The US stock market stands 4% higher today compared to a year ago, despite the death and destruction unleashed by the coronavirus pandemic.
I wasn't even invested 20 years ago. No money. But even with 58% bonds, 36% stocks, I'm down from my high-point by -7.5% tonight, including recent dividends. I'm not adding anything to the retirement portfolio. Minimal monthly additions into non-retirement account bond fund. So, not buying any more stocks, I am naturally more concerned about YIELD.
man, fwiw, I think this probably is backward --- add to retirement, add to equities, forget yield, do it, as bigtime as you can. How much time lies ahead before retirement?
The following is especially really deep... "Even Goldman Sachs, which is bullish on stocks in the long run, is warning clients to brace for a bumpy ride this summer. "
When the market loses 10+% the articles are doom and gloom and usually talk about the DOW because it's catchy to say the DOW is down over 3000 points than to say the SP500 is down over 300 points.
@davidmoran: I'm retired, wife works under the table, now. Gotta have earned income in order to make tax-deferred "contributions" to IRA. A couple of times, a few years ago, my contributions to Trad. IRA turned out to be unintended non-deductible----- because there was not enough income on the tax form to make those contributions "against." Thankfully, despite that fact, things look pretty rosy for myself and my wife, these days.
If I understand you correctly, there were a couple of years in which you had compensation allowing you to contribute to an IRA. But on your tax form, after taking deductions, exemptions, etc., you had little or no taxable income left against which to deduct the IRA contributions.
This doesn't help you now, but at the time you discovered that a contribution was non-deductible you might have recharacterized the contribution as a Roth contribution. At least if this happened after 1996 (Roths started in 1997). That way, the earnings on these contributions would be tax-free.
Still, because you didn't deduct the contributions when you made them, the amounts you contributed (but not their earnings) will be tax-free when you withdraw them.
@msf and @davidmoran You are confirming what my tax guy has told us. He is really, really good. But he's back in Massachusetts, still. We used him for 2019 tax return because we had partial-year MA and HI, both. Is there anything apart from what his personal preference might be that would keep us from continuing to use him? ..... BTW, 2020 ---- back in January, was the first time I took ANYTHING from the Trad. IRA. Ostensibly then, that legitimate portion of the distribution can be reported as non-taxable. He spelled it out for me a couple of times: the formula the IRS uses to "tease-out" the non-taxable portion from the rest of it, but it all just sounded ridiculously arcane, complicated and utterly convoluted to me. In other words: bullshit. There is exactly $5,000 of non-taxable money in that IRA, but somehow, it's not possible to just tell the IRS: "OK, I'm taking that $5,000.00 now. See you later." (If we COULD continue to use him, HE would be familiar with our circumstances and we could rely on him to let us know what the status is, in hard-dollar terms, from year to year. It would not take more than a few years, I suppose, to run through that $5,000.00).
The rule for taxing T-IRA distributions shouldn't sound too convoluted. It just requires you to do things proportionately.
Say that your total T-IRA value at the end of 2019 was $100K ($5K post-tax, $95K pre-tax contributions and earnings). Then 5% of the IRA was post-tax, 95% pre-tax.
So when you take money out in 2020, 5% of it is post-tax (tax free) and 95% of it is pre-tax (taxable). If you take out $5K this year, then you're taking out 5% x $5K = $250 of post-tax money. That leaves $4750 in post-tax money.
At the end of 2020 you repeat the percentage calculation. If your IRA is again worth $100K, then 4.75% of it is post-tax, and 95.25% is pre-tax. --- As far as using an out of state tax person goes, the only potential downside I can see is less familiarity with state tax laws. Most things tend to be the same or similar across states. But each state seems to have its own set of quirks that might help you or might serve as gotchas.
Simple example: In Hawaii, it looks like you had to have made your first estimated tax payment (if any) by April 20th. But Massachusetts, like many other states, extended the 1Q and 2Q estimate deadlines to July 15th.
A responsible professional is going to study the rules, but that's still time and effort. And as a novice for the new state, there's still the possibility that they might miss something.
@Crash I've been using the same tax guy for 20 years even though I moved out of state in 2016.Apparently he prepares quite a few tax returns for St. Louisans who've moved out of state. The only hassles are Fedexing my info to him and the fact he only accepts cash or checks. I moved to Florida so he doesn't have to prepare a state tax return, but if I moved again I would feel fully comfortable with him preparing my state tax returns again.
Comments
The following is especially really deep...
"Even Goldman Sachs, which is bullish on stocks in the long run, is warning clients to brace for a bumpy ride this summer. "
When the market loses 10+% the articles are doom and gloom and usually talk about the DOW because it's catchy to say the DOW is down over 3000 points than to say the SP500 is down over 300 points.
This doesn't help you now, but at the time you discovered that a contribution was non-deductible you might have recharacterized the contribution as a Roth contribution. At least if this happened after 1996 (Roths started in 1997). That way, the earnings on these contributions would be tax-free.
Still, because you didn't deduct the contributions when you made them, the amounts you contributed (but not their earnings) will be tax-free when you withdraw them.
Say that your total T-IRA value at the end of 2019 was $100K ($5K post-tax, $95K pre-tax contributions and earnings). Then 5% of the IRA was post-tax, 95% pre-tax.
So when you take money out in 2020, 5% of it is post-tax (tax free) and 95% of it is pre-tax (taxable). If you take out $5K this year, then you're taking out 5% x $5K = $250 of post-tax money. That leaves $4750 in post-tax money.
At the end of 2020 you repeat the percentage calculation. If your IRA is again worth $100K, then 4.75% of it is post-tax, and 95.25% is pre-tax.
---
As far as using an out of state tax person goes, the only potential downside I can see is less familiarity with state tax laws. Most things tend to be the same or similar across states. But each state seems to have its own set of quirks that might help you or might serve as gotchas.
Simple example: In Hawaii, it looks like you had to have made your first estimated tax payment (if any) by April 20th. But Massachusetts, like many other states, extended the 1Q and 2Q estimate deadlines to July 15th.
A responsible professional is going to study the rules, but that's still time and effort. And as a novice for the new state, there's still the possibility that they might miss something.