Thanks. I think we do have our credit frozen - will double check on that. Chase seems to do a good job on sniffing out unusual charges, but I would not want a new account opened. I currently do 2FA on big accounts like Fidelity/401K and Schwab investment.
Maybe I don’t need the Kroll credit monitoring. But it gets me wondering what other damage can be done with SSN. I have heard of imposter car loans, but I assume freezing my credit will prevent that. I have not yet filed for Social Security, but I do have an online account.
Has anyone attended one of these? I know @Colorado_mom has talked about some classes she attended.
It’s $40 for dh and I. Seems like it could be worth it to get a second opinion on what we are doing with our FA. The only thing giving me pause is it says it’s a nonprofit, but it has a .com address. I can resist a hard sell, so I’m not that worried about it.
Grrr, I still can’t figure out what to do. We took out a bunch of money from our 401k’s to buy a forest, and I’ve been making quarterly estimated tax payments on it. Still going to have to come up with 50-70K for the next two quarterly payments.
Don’t have the cash for this, so our options are: more 401K withdrawal (but this will be at high tax rates), Roth withdrawal (but that’s money that should be withdrawn last), HELOC useage (at 8.5% yikes), car loan on a paid off car (6% maybe?) or paying the IRS underpayment penalty (unsure how much that is). I still can’t find any cheap money out there. Maybe some 0% credit cards. Can’t believe we’re actually taking on debt after retirement, but this forest was a good purchase. What a mistake that we paid our 2.25% mortgage down so much!!
If we weren’t retired, we would just work more, but that option is long gone.
Don’t take my word as a gospel… Check with your CPA… but I think the last estimated payment is due in mid-January. If you sell your 401(k) shares in January to pay the last estimated payment, the tax on that could be in a lower tax bracket depending on your income of course. This strategy can backfire if the market tanks and your 401(k) plummets.
Or maybe you can cash some shares out now and just wait to withdraw in January. If also ask the CPA to run the penalty estimate or you can do it in TurboTax.
I was thinking about that, we could withdraw some from our 401K next year, which would be at a lower tax rate than this year. Problem is, I’d have to skip the third quarterly estimated payment on 9/15. Maybe the penalty would not be too much if I did a double payment on 1/15. I’ve never done the quarterly estimated payment thing before.
It’s weird withdrawing from our 401K so early into retirement!
Only if it’s going to be left as an inheritance. When you are later in retirement you may not be spending so much and your marginal tax rate will be lower. So may be better to use it as and when to avoid high marginal rates/Medicare penalties. Another option would be to withdraw the money and repay it in 60 days without penalty.
That’s interesting, I didn’t know about the 60 days. We do hope to leave our Roths as an inheritance, and I wonder about tax rates in the future, as we have pensions, and eventually RMD’s will kick in also. But tax laws continue to change, so who knows? Maybe a combination of 401k/Roth/loans is in order, since there’s nothing obvious to pick. We just have to hang on for a year or two, until our DST (Delaware Statutory Trust) goes full cycle, and then we have access to that money.
We already have a HELOC, but it’s at 8.5%, pretty high interest. We have quite a bit of equity, maybe they will give out a home loan in addition, I just suspect interest rates are high. It used to be easy to get cheap money for the short term, and now it seems quite difficult.
I’d calculate the penalty (if any) for not paying the September payment on time and compare that with the HELOC interest accrued from September to January (plus account for any potential hit from taxes due to extra retirement fund withdrawals).
But if you only need an extra 50k, I’d dip into the Roth to avoid any tax implications.
I say use the Roth as it becomes helpful to you. Inheritance money to our kids (there will likely be plenty) will be a windfall. If they have to pay taxes on it, so be it.
@Youdon_tsay - I didn’t use that particular retirement planning kind of course, but our various classes did meet on community college campuses (I saw your link had university location)… so I assume legit
Think I’ll take your advice. Checked into it, and the penalty is not that much, 0.5% per month. So actually at 6% annual rate, that’s pretty low compared to the HELOC, and sometimes it’s not what you expect. For example, last year we underpaid by 17K because we sold a rental condo in April and didn’t make high enough estimated tax payments, and the underpayment penalty was miniscule. Then we can wait till the Jan payment is due and pull out funds as needed.
And here I thought taxes would be simple in retirement.
I thought the interest was only if you didn’t pay by the time your taxes were due, ie April 15th? Think we’ve only paid interest when we got an extension and filed late. Hmm, now I’m wondering about this.
We had to pay underpayment penalty and interest. If I remember correctly, they calculate it from the date you had the taxable income. If you had income at the beginning of the year, it had to be reflected on all 4 estimated tax payment. If you had it in the middle of the year, should show in the second two estimated tax payment for example. It was a long time ago and I could be remembering incorrectly or the rules could have changed.
It looks like now, that you only have to pay interest on whatever isn’t paid by the time your tax return is supposed to be filed (so April 15 for most of us). At least, that’s how I read the IRS website.
I dunno, it’s confusing. But I looked at my tax return for 2021, and I owed 62K upon filing. They only charged me $416 in penalties. In 2022, I owed 17K, and they charged me $36. I filed returns on time, both times, and it was a similar situation with a real estate sale, and estimated taxes paid twice over the year.
I think I’m just staying in retirement mode and not panicking to get the money. I’ll pay when I have it.