There seems to be an advantage to Roth conversion now until 12/31/2025

General Discussion on the Permanent Portfolio Strategy

Moderator: Global Moderator

User avatar
ochotona
Executive Member
Executive Member
Posts: 2879
Joined: Fri Jan 30, 2015 5:54 am

Re: There seems to be an advantage to Roth conversion now until 12/31/2025

Post by ochotona » Mon Oct 15, 2018 9:47 pm

Kbg wrote:
Mon Oct 15, 2018 7:24 pm
I recently had an audit from my state on my military retirement (left, became a Texan for many years and moved back). States definitely do this stuff and you need to have your ducks lined up and be familiar with your state's specific tax law on these things...I had my ducks in a row so other than sending off lots of tax return copies it was uneventful.

However, do not do tax moves like this lightly and make sure you are well informed.
How many years did they go back in the investigation?
User avatar
sophie
Executive Member
Executive Member
Posts: 3220
Joined: Mon Apr 23, 2012 7:15 pm

Re: There seems to be an advantage to Roth conversion now until 12/31/2025

Post by sophie » Tue Oct 16, 2018 8:07 am

New York is well known for going after residents "moving" to other states but keeping an address in NY. I think if you move completely and have no address in the state there's nothing they can do. Not that they wouldn't try :-)

New York's tax structure is actually not bad for retirees, especially frugal ones. You get not only the $20K exemption on top of the standard one, but also SS is not taxed. And there are financial as well as quality of life benefits to living in NYC. Cars are an expensive hobby you know! So not such as simple question of whether to move. There would have to be a significant quality of life improvement, which involves things like being close to family.

Bedraggled, glad you're enjoying Florida!
User avatar
Kbg
Executive Member
Executive Member
Posts: 1401
Joined: Fri May 23, 2014 4:18 pm

Re: There seems to be an advantage to Roth conversion now until 12/31/2025

Post by Kbg » Tue Oct 16, 2018 10:46 am

ochotona wrote:
Mon Oct 15, 2018 9:47 pm
Kbg wrote:
Mon Oct 15, 2018 7:24 pm
I recently had an audit from my state on my military retirement (left, became a Texan for many years and moved back). States definitely do this stuff and you need to have your ducks lined up and be familiar with your state's specific tax law on these things...I had my ducks in a row so other than sending off lots of tax return copies it was uneventful.

However, do not do tax moves like this lightly and make sure you are well informed.
How many years did they go back in the investigation?
Och,

What they normally do is flag the tax year retired and then go from there based on what they find out. So in my case I had to provide everything for that tax year and answer a four page questionnaire of which all the questions were focused on citizenship stuff. I'm pretty sure I would have been fine either way, but fortunately my last assignment ended up being in Texas as well so I was pretty much bullet proof. I transitioned everything over to the new state the day after my official retirement and as I heard getting an audit was fairly common I kept a good Texas resident documentation trail over the years.
User avatar
technovelist
Executive Member
Executive Member
Posts: 5048
Joined: Wed Sep 15, 2010 11:20 pm

Re: There seems to be an advantage to Roth conversion now until 12/31/2025

Post by technovelist » Tue Oct 16, 2018 1:01 pm

sophie wrote:
Tue Oct 16, 2018 8:07 am
New York is well known for going after residents "moving" to other states but keeping an address in NY. I think if you move completely and have no address in the state there's nothing they can do. Not that they wouldn't try :-)

New York's tax structure is actually not bad for retirees, especially frugal ones. You get not only the $20K exemption on top of the standard one, but also SS is not taxed. And there are financial as well as quality of life benefits to living in NYC. Cars are an expensive hobby you know! So not such as simple question of whether to move. There would have to be a significant quality of life improvement, which involves things like being close to family.

Bedraggled, glad you're enjoying Florida!
I would be astonished to learn that living in NYC could possibly be cheaper than living in Texas no matter what your tax status.

I do know that NYC real estate taxes are relatively low, but I can't see how that could possibly make up the difference in the cost of virtually everything else.

And of course the cost of real estate in NYC is so high that a large portion of your net worth must be tied up in your apartment. Of course that produces no income other than the imputed income of rent savings. Thus, for a fair comparison you would have to add the value of that apartment (less the cost of your new living space) to your net worth if you were to move.

I think if you include this, there is no way you are better off financially staying there.
User avatar
sophie
Executive Member
Executive Member
Posts: 3220
Joined: Mon Apr 23, 2012 7:15 pm

Re: There seems to be an advantage to Roth conversion now until 12/31/2025

Post by sophie » Tue Oct 16, 2018 11:15 pm

OK will grant that - in fact yes, if it were only about finances I'd very likely move.

I think you'd be surprised at relative costs in NYC and Texas. Cost of living comparisons usually cherry pick a few items, and end up with a wildly un-representative sample. I once pulled a sheet of average spending figures broken down into categories, intended to be comprehensive, published by BLS. I compared these to my #s plus figures from my coop's annual financial statement, since a lot of my expenses are buried in the monthly maintenance. My living costs were high in some categories, but lower in others and overall it came pretty close to balancing out. You can certainly spend a ton of money in this city if you want, but you don't have to by any means.
User avatar
ochotona
Executive Member
Executive Member
Posts: 2879
Joined: Fri Jan 30, 2015 5:54 am

Re: There seems to be an advantage to Roth conversion now until 12/31/2025

Post by ochotona » Wed Oct 17, 2018 6:21 am

sophie wrote:
Tue Oct 16, 2018 11:15 pm
OK will grant that - in fact yes, if it were only about finances I'd very likely move.

I think you'd be surprised at relative costs in NYC and Texas. Cost of living comparisons usually cherry pick a few items, and end up with a wildly un-representative sample. I once pulled a sheet of average spending figures broken down into categories, intended to be comprehensive, published by BLS. I compared these to my #s plus figures from my coop's annual financial statement, since a lot of my expenses are buried in the monthly maintenance. My living costs were high in some categories, but lower in others and overall it came pretty close to balancing out. You can certainly spend a ton of money in this city if you want, but you don't have to by any means.
Housing costs have gotten out of control in the nice areas of Houston, like the Heights. Egads. Might as well be Seattle. Midland? Forget trying to buy any house now
User avatar
pugchief
Executive Member
Executive Member
Posts: 2933
Joined: Tue Jun 26, 2012 2:41 pm
Location: suburbs of Chicago, IL

Re: There seems to be an advantage to Roth conversion now until 12/31/2025

Post by pugchief » Wed Oct 17, 2018 7:01 am

ochotona wrote:
Wed Oct 17, 2018 6:21 am
sophie wrote:
Tue Oct 16, 2018 11:15 pm
OK will grant that - in fact yes, if it were only about finances I'd very likely move.

I think you'd be surprised at relative costs in NYC and Texas. Cost of living comparisons usually cherry pick a few items, and end up with a wildly un-representative sample. I once pulled a sheet of average spending figures broken down into categories, intended to be comprehensive, published by BLS. I compared these to my #s plus figures from my coop's annual financial statement, since a lot of my expenses are buried in the monthly maintenance. My living costs were high in some categories, but lower in others and overall it came pretty close to balancing out. You can certainly spend a ton of money in this city if you want, but you don't have to by any means.
Housing costs have gotten out of control in the nice areas of Houston, like the Heights. Egads. Might as well be Seattle. Midland? Forget trying to buy any house now
Is that perhaps due to all the people fleeing CA for TX?
User avatar
ochotona
Executive Member
Executive Member
Posts: 2879
Joined: Fri Jan 30, 2015 5:54 am

Re: There seems to be an advantage to Roth conversion now until 12/31/2025

Post by ochotona » Wed Oct 17, 2018 7:20 am

pugchief wrote:
Wed Oct 17, 2018 7:01 am
ochotona wrote:
Wed Oct 17, 2018 6:21 am
sophie wrote:
Tue Oct 16, 2018 11:15 pm
OK will grant that - in fact yes, if it were only about finances I'd very likely move.

I think you'd be surprised at relative costs in NYC and Texas. Cost of living comparisons usually cherry pick a few items, and end up with a wildly un-representative sample. I once pulled a sheet of average spending figures broken down into categories, intended to be comprehensive, published by BLS. I compared these to my #s plus figures from my coop's annual financial statement, since a lot of my expenses are buried in the monthly maintenance. My living costs were high in some categories, but lower in others and overall it came pretty close to balancing out. You can certainly spend a ton of money in this city if you want, but you don't have to by any means.
Housing costs have gotten out of control in the nice areas of Houston, like the Heights. Egads. Might as well be Seattle. Midland? Forget trying to buy any house now
Is that perhaps due to all the people fleeing CA for TX?
That's definitely a contributor.
User avatar
pugchief
Executive Member
Executive Member
Posts: 2933
Joined: Tue Jun 26, 2012 2:41 pm
Location: suburbs of Chicago, IL

Re: There seems to be an advantage to Roth conversion now until 12/31/2025

Post by pugchief » Wed Oct 17, 2018 10:43 am

ochotona wrote:
Wed Oct 17, 2018 7:20 am
pugchief wrote:
Wed Oct 17, 2018 7:01 am
ochotona wrote:
Wed Oct 17, 2018 6:21 am


Housing costs have gotten out of control in the nice areas of Houston, like the Heights. Egads. Might as well be Seattle. Midland? Forget trying to buy any house now
Is that perhaps due to all the people fleeing CA for TX?
That's definitely a contributor.
If Beto beats Ted next month, it's prob an indication that more is happening here than just an increase in housing prices. I hear migration of New Yorkers is having a similar unplanned effect on Florida.
bedraggled
Executive Member
Executive Member
Posts: 560
Joined: Sat Sep 13, 2014 4:20 am

Re: There seems to be an advantage to Roth conversion now until 12/31/2025

Post by bedraggled » Wed Oct 17, 2018 8:53 pm

Sophie and I agree. The costs in Florida and New York can be comparable. We are not big spenders. I do miss public transportation more than I thought possible. The subways and buses are great, even if they are rotting at the moment. There isn’t much community and “neighborhood” here is concept. If a person wants to spend money in Manhattan, convene a HBPP lunch on West 181st Street down from the “A” train station.

Actually, the beer is a big part of the tab. Barrett and Goodasgold are currently out of town. I will be back to Manhattan in February for subway rides and bar food, if you(s) are interested.

BTW, one of the joys of Florida is that I-95 rarely has traffic and the airport drive offers no stress. The snow and ice do not tear up the road as much in Fort Lauderdale, also.
User avatar
sophie
Executive Member
Executive Member
Posts: 3220
Joined: Mon Apr 23, 2012 7:15 pm

Re: There seems to be an advantage to Roth conversion now until 12/31/2025

Post by sophie » Thu Oct 18, 2018 7:20 am

pugchief wrote:
Wed Oct 17, 2018 10:43 am
If Beto beats Ted next month, it's prob an indication that more is happening here than just an increase in housing prices. I hear migration of New Yorkers is having a similar unplanned effect on Florida.
[/quote]

That's an interesting unintended effect of Trump's tax plan, isn't it? Revenge on blue states (if that's what it was) -> effective increased tax burden on blue state residents -> outmigration to less heavily taxed places -> increase in Democratic votes in said places.
User avatar
pugchief
Executive Member
Executive Member
Posts: 2933
Joined: Tue Jun 26, 2012 2:41 pm
Location: suburbs of Chicago, IL

Re: There seems to be an advantage to Roth conversion now until 12/31/2025

Post by pugchief » Thu Oct 18, 2018 7:38 am

sophie wrote:
Thu Oct 18, 2018 7:20 am
pugchief wrote:
Wed Oct 17, 2018 10:43 am
If Beto beats Ted next month, it's prob an indication that more is happening here than just an increase in housing prices. I hear migration of New Yorkers is having a similar unplanned effect on Florida.
That's an interesting unintended effect of Trump's tax plan, isn't it? Revenge on blue states (if that's what it was) -> effective increased tax burden on blue state residents -> outmigration to less heavily taxed places -> increase in Democratic votes in said places.
The outmigration has been happening since long before Trump took office. Some of it is demographics: retiring baby boomers seeking a warmer climate and a lower tax burden. The rest is, laughably, people fleeing the blue state mess that they or their neighbors voted into existence in the first place. Who are now going to move to red states and try to vote in the same garbage they are fleeing. ???
Post Reply