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Arrrrrrg! I hate money!
Old 01-27-2019, 06:28 AM
 
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I have done more thinking/talking about money since I retired 2 years ago (sold a house, bought a condo, remodeled, single person taxes) than I have in my whole previous life. DH worked in HR and was my trusted money man. Now Iím trying to deal alone and I hate it.

I have come to feel that we are being punished by the government for our frugality and saving.
*even with the married exclusion, because we lived in our house so long, both my tax guy and my financial advisor predict Iím going to owe (sit down) $125,000 for the sale of the house. I guess it doesnít matter that I spent nearly as much on a new placeóall that matters is what we originally paid and the sale price of the old house.
*Iíll soon be 68 so both the tax guy and the financial advisor are talking about RMDs (required minimum distributions). Basically, every year I have to pull a chunk from savings and pay tax on itóand more as I get older (or as the government chart sees it, closer to dying).

My wonderful son-in-law keeps reminding me Iím lucky to have this problem, to have enough money. Heís right, but life was so much simpler when we were saving. Who ever thought Iíd be a mandated spender?

I really hate this money stuffóprobably because I understand so little and making fiscal decisions makes me miss DH.

Do you understand money?


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Old 01-27-2019, 06:47 AM
 
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I have a money man too and god bless him for it. I know about our finances but keep saying that I need to share more of this task with him. I havent done so yet....

Its been 1 year since both of us retired and our biggest expenses are medical and taxes. Retirees often anticipate medical but not taxes. They never go away and continue to be an annoying fact of life. Uncle Sam wants his money!

Good problems to have but no fun. Sounds like you are doing great so hang in there.
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Not looking forward to taxes...
Old 01-27-2019, 07:48 AM
 
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When I met with my tax accountant after I started receiving the first of my two pensions, he told me I needed to have more money withdrawn for taxes, which I did. When I started receiving my NJ pension and met with him this summer, he also told me to up the amount, which I did. I am hoping that when I meet with him in a few weeks that I will have had enough withdrawn so I don't have to pay anything. Not looking forward to having to withdraw money from my 403B in 5 years when I reach the age for that.
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Money
Old 01-27-2019, 08:29 AM
 
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Sing it, sister! I have to take DH with me to all financial meetings because after 5 minutes, my eyes glaze over and all I hear is “wha wha wha.”

As I’m now sending my way through distributing my parents’ trust, I am really, really trying to make sense of it so if DH goes before me, I won’t feel like a complete idiot.

I have an uncle who is a CPA and has been a huge help.

And you’re right, it feels like we’ve worked really hard to have enough money for retirement, but when it’s time to get the distribution, Uncle Sam is there with his hand out.

I’m aarrggging with you.
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Old 01-27-2019, 09:30 AM
 
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Iím so sorry you got dinged by the tax man on your sale, Amiga.


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Old 01-27-2019, 10:05 AM
 
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Wow! That's a lot of money. Were you aware of this when you sold the house? I hope it didn't come as a total surprise. I know we will owe as well. We need to change something as I'd like to just break even. I remember the days we used to get money back.
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I am not a money person either
Old 01-27-2019, 10:44 AM
 
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But what you are saying concerns me. I sold my home in Austin and reinvested in another home farther north within my state much like you did. I had money left over from the sale of my home and purchase of a new home and did not pay capital gains. Perhaps it is a difference in state law. I do not know. I do know it had something to do with us being older citizens. Please check with a real estate lawyer who knows the latest laws. Talk to several if needed. I hope the advise you are getting now is not correct. But like I said, I am not a money person and know nothing about California state laws. Good luck Amiga.
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Old 01-27-2019, 11:06 AM
 
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1956, itís a federal tax law. Iíll bet I can put your Texas mind to rest, but Iíd have to talk numbers and Iím not willing to do that publicly. You are welcome to PM me.
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Old 01-27-2019, 11:37 AM
 
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All of the tax implications can be overwhelming. When we investigate moving the first thing we check out is the stateís taxes on pension and social security. I want relax my brain in retirement and not think about complex matters.
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Old 01-27-2019, 11:52 AM
 
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I want relax my brain in retirement and not think about complex matters.
Me, too!!!


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Got it!
Old 01-27-2019, 12:38 PM
 
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I am still sorry you owe that much. I guess you will have to adopt the point of view your son in law offered. It may take a while to accept.
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Old 01-27-2019, 02:38 PM
 
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*Iíll soon be 68 so both the tax guy and the financial advisor are talking about RMDs (required minimum distributions). Basically, every year I have to pull a chunk from savings and pay tax on itóand more as I get older (or as the government chart sees it, closer to dying).
While you can take money out without penalty (age over 59 1/2), my understanding is that the required minimum distribution age is the year you turn 70 1/2 (or your spouse would be 70 1/2 if you inherited his account).

One more thing to think about is the taxes on the RMD. The amount of taxes is set by tax table which doesn't take into consideration your total income. You may need to take additional taxes out or be surprised at tax time.

Give your son in law a hug. He's a great guy with a good attitude about life.
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Old 01-27-2019, 02:47 PM
 
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While you can take money out without penalty (age over 59 1/2), my understanding is that the required minimum distribution age is the year you turn 70 1/2 (or your spouse would be 70 1/2 if you inherited his account).
Iím sorry, I wasnít clear. I meant Iíll soon be 68 and theyíre preparing me for what happens when Iím 70.5. They just want me to start thinking about it.

Now youíre scaring me. My DH would have turned 70 this coming June. No one who advises me has said a word about that. They just say when I am 70.5. Are you saying I MUST do RMDs sooner than when I turn 70.5 based on my deceased husbandís age?
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Old 01-27-2019, 04:13 PM
 
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If it’s an account you set up for you, yourself, and the account never was in anyone else’s name, it’s when you turn 70 1/2.

But, when when it’s an inherited account there are different rules. I was the beneficiary of my late husband’s 401k. The year he would have been 70 1/2 (I was in my 60s) I had to start taking the RMD from that account based on his date of birth. I had no idea until I received a letter from the account custodian.

The rules are different, and they also vary by what you did with the spouse’s account after his death, so if you have an account that was originally your spouse’s, you need to check when the distribution is required.

By federal law, for a 401k, they are required to send you a letter the first year you are required to take distributions, so be sure your mailing address is correct on your accounts.

Don’t be scared. It’s not hard.
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Old 01-27-2019, 04:38 PM
 
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You are allowed to exclude $250,000 from profits made when selling your house. $500,000 for a married couple. The $125,000 you are taxed on represents a total profit of $375,000. I know this sounds like an outlandish amount of money to many people. But it is common in California when you sell a house you have owned for many years.
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Old 01-27-2019, 05:58 PM
 
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I too am walking down new financial roads. DH has always handled our finances but since he has been ill I know that I really need to clearly understand our financial situation. I'm working daily with him on preparing our income taxes so I would know how to do that on my own.

We too faced RMD taxes this year and we'll both have to withdraw those funds next year. Our investments have always done quite well but this year's Wall Street roller coaster ride cost us even though we have conservatively invested. I know that the falling market only affects us when we sell, but it's unnerving to watch it sink.

We're considering relocating so the prospect of selling and buying another home has my head spinning. Juggling these financial decisions makes my head spin.
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Old 01-27-2019, 06:12 PM
 
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Juggling these financial decisions makes my head spin.
Me too! And misery loves companyóIím glad itís not just me.
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Old 01-27-2019, 06:21 PM
 
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Oh my goodness.....all that jargon is Greek to me!
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Amiga13 and ladies
Old 01-28-2019, 06:54 AM
 
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Amiga13, I tell myself that there are never times when financial security is guaranteed. We are capable of navigating these issues as women have done for years before us. If we don't know the answers, we can find them.
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Old 01-28-2019, 11:37 AM
 
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About those required minimum distributions . . .

You do have to start taking them from your traditional IRA when you're 70 1/2,
but it appears there's a way to avoid paying taxes on some or all of that money. Under current tax law, you can make a QCD, or qualified charitable distribution, to an IRS-approved charity if you're 70 1/2. If these conditions are met, no federal taxes are owed on these withdrawn IRA funds. I'm not sure if you can do it with a 401k or 403b.

If you're able to itemize on your federal taxes, these distributions cannot be claimed on your Schedule A. With the new tax laws, though, most people will probably be better off taking the standard deduction.

More about QCDs:
https://www.marketwatch.com/story/a-...nds-2018-11-14
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Old 01-28-2019, 06:46 PM
 
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Amiga, Iím sure you probably know this, but I just happened to be reading up on the laws for capital gains on house sales. You do know that on top of the original price you can count money spent on remodeling/repairs/improvements toward your cost basis? Also, your husbandís half of the house should be calculated on a stepped up basis to market price when he died. At least thatís my understanding. I assume this has been figured in if you have a tax person doing your taxes, but it doesnít hurt to check. *I am not an expert! I just happened to be researching this very thing a couple of days ago.*
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Old 01-28-2019, 06:52 PM
 
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Hereís one of the articles I read that may help.

https://www.wife.org/widows-pay-capi...ath-spouse.htm
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Old 01-28-2019, 09:08 PM
 
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Thanks a lot, annie! Yes, the new tax guy told me about the home repairs/receipts and thanks to the hassle of selling, I actually have that info (and I spent quite a bit getting the house ready to sell).

I also understand the $500,000 exclusion, but California prices are so high that only helps a little.

Iíve never heard of the stepped-up thing. I read it 4 times and still donít get it. Iíll ask the tax guy about it.

Thanks again.
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Old 01-29-2019, 04:36 PM
 
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This was in the comments in that article. Could this apply to you?
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Old 01-29-2019, 04:47 PM
 
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annie, I practically screamed today when a different financial guy was trying to be helpful and mentioned “stepped up.”

I spent all afternoon organizing, listing, and adding up what I spent on the old house for the last 3 years. That’s what the tax guy asked for. Maybe he can figure out if “stepped up” is called for (too or instead).

And I just found and printed the appraisal that my lawyer made me get. It’s dated the day of my husband’s death. I put that in the ever-growing bag for the tax guy.

Thanks for thinking of me.
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Old 01-29-2019, 04:54 PM
 
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Basically it sounds like you can use the value of the house at the time of your husbandís death instead of what you paid for it many years ago as the cost basis which should help you.
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Old 01-29-2019, 05:04 PM
 
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Absolutely, annie! If I can use the value at the time of his death, Iíll be in much better shape. Iím starting to get thisóand now Iím glad I paid $650 for the appraisal. And Iím really glad youíre helping me.
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Old 01-29-2019, 05:05 PM
 
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Let us know what you find out! Hope it helps!
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Old 01-29-2019, 05:07 PM
 
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You should be able to take the married $500,000 capital gains exemption, too.
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Old 01-29-2019, 06:13 PM
 
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You should be able to take the married $500,000 capital gains exemption, too.
Oh yes! That part I understand!
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