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Dang wished I would have know this sooner

mogley98mogley98 Member Posts: 18,291 ✭✭✭✭
edited November 2016 in General Discussion
So I was talking to the accountant about needing to pay less taxes and where I could stash money besides the IRA and HSA. He says open a SEP and stuff it. Says I can keep my traditional IRA and still add to a SEP within certain limits of net income.
Now I wonder why he didn't tell me that sooner.
Why don't we go to school and work on the weekends and take the week off!

Comments

  • TooBigTooBig Member Posts: 28,559 ✭✭✭
    edited November -1
    You should have asked him sooner[8D][}:)]
  • Don McManusDon McManus Member Posts: 23,681 ✭✭✭✭
    edited November -1
    Two schools of thought.

    With an SEP IRA, just like any other non-Roth IRA, the Federal Government owns a percentage of that money. A percentage that will be determined when you take it out.

    Also, when you take out the money it is counted as income, and will go against your limit as you begin to collect Social Security. Potentially, then, this pre-tax money becomes income that will be taxed at your marginal rate and will also be income that can reduce your Social Security check.

    My banker is all about pre-tax money because its gains are not taxed until withdrawal. I personally, am not a fan, as upon retirement, if I want to take out a big chunk of change for some reason in any given year, after tax money will not be taxed at a potentially hirer rate than I am paying now, and what little is left of Social Security is also not affected.
    Freedom and a submissive populace cannot co-exist.

    Brad Steele
  • mogley98mogley98 Member Posts: 18,291 ✭✭✭✭
    edited November -1
    Don, I have always had a concern that changes in the tax laws could cause me or anyone to have to pay more in taxes on withdrawals then what would have been due when it was deferred!

    I think Congress could encourage more saving by inserting a clause saying you will never have to pay a higher percentage of tax then the tax that would have been due when it was deferred although the calculations could become difficult.

    That said I still need to defer some income to keep myself in a lower bracket.

    I also have a Roth of course funded with after tax money.

    quote:Originally posted by Don McManus
    Two schools of thought.

    With an SEP IRA, just like any other non-Roth IRA, the Federal Government owns a percentage of that money. A percentage that will be determined when you take it out.

    Also, when you take out the money it is counted as income, and will go against your limit as you begin to collect Social Security. Potentially, then, this pre-tax money becomes income that will be taxed at your marginal rate and will also be income that can reduce your Social Security check.

    My banker is all about pre-tax money because its gains are not taxed until withdrawal. I personally, am not a fan, as upon retirement, if I want to take out a big chunk of change for some reason in any given year, after tax money will not be taxed at a potentially hirer rate than I am paying now, and what little is left of Social Security is also not affected.
    Why don't we go to school and work on the weekends and take the week off!
  • spasmcreekspasmcreek Member Posts: 37,717 ✭✭✭
    edited November -1
    pay less taxes...THAT'S UNAMERICAN....we just got our appraisals ..even out here in the sticks .....property taxes are insane and the only real answer for income taxes is ...earn less...obummer said it was NOT a tax.....really????
  • woodshed87woodshed87 Member Posts: 23,478 ✭✭✭
    edited November -1
    SEP = Sock Extra Protected And Stuff It[;)]
  • MIKE WISKEYMIKE WISKEY Member Posts: 10,043 ✭✭✭✭
    edited November -1
    with a SEP from a business you own you have to offer/deposit the same percentage you take to your other employees.
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