Invest and begin withdrawals, invest and hold until RMDs start, pay off bills, buy a house, or????
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State tax depends on the rules in the state to which you move. The state may or may not tax your income based on the source, the date you moved to the state, number of days you lived there in the year and whether you fit the other requirements for tax residency. It helps if you are not working in that state, which is an issue for some work at home folks who are at a second home in a state with inc9me tax.
Retirement timing is key. Retire in 2007 vs 2009 has a big impact on future IRA growth.
I am pretty fortunate to have hit the sweet spot as regards severance/age getting 3 weeks instead of 2 is perfect , only a very short time to hit SS and I get this pay out including some Medical benefits too to live thru next year and minimal taxes. I could "hide/defer" some of it in an IRA in 2021, plenty of time to do the Math on that. The next 2-3 years of recession is going to be brutal for most folks - it's so sad - just be glad you are getting something at all. Wish you all well -Goodbye
3yui: even if you move out of state next year your severance is income from tax (or wherever you worked before getting canned), so you will not have to pay taxes on it in another state. It will make your taxes slightly harder to file, but that’s about it. Simply put, you are better getting your severance early next year in almost all cases (not I guess if you already have a better job lined up for next year).
You can move your LS into an IRA withiut getting taxed where ever you live, you jget taxed when you withdraw from it. The severance will be taxed when you get it.
If I get canned, I’m planning to move to a state with a ~5% state income tax. I did the math and figured out that it’s be slightly better for me to get the money whole living in Texas without state income tax, but at the higher marginal federal rate, than next year assuming I get a new job in that state. For that reason, I’ll be signing the release ASAP if I get laid off.
Just something to consider...
Make sure you understand the difference between your tax bracket and your marginal tax rate. Generally it's better to spread it out for a lower marginal tax rate even if the upper bracket is the same. That said... Taxes were at a 50 year low before the Trump tax cuts, which included a poison pill to automatically increase under the next administration.
#1 piece of advice - get a financial advisor, if you don’t have one already. Take their advice, not the stuff here.
IRA first, and depending on age, but key question is when, where, and how much to divert to stocks/other funds (other than money market) for growth. I know Fidelity offers some dollar averaging methods (regular transfers) to funds if one doesn't prefer to do themselves....with so low interest rates, MMF is only .3 currently; of course, flip side is that this leads to LARGES payouts as well...
Good idea. I will definitely look into an annuity around age 75 or 80. That is when you may actually need longevity insurance and the terms are extremely favorable since insurers assume you will die soon.
After rollover i will pay off debt then withdraw what i need to live on, may even buy an annuity.
Is there a lay-off section of this site? I heard there was. You know, to discuss topics related to layoffs.
8% of mortgage payments missed which is low. Foreclosures are currently at record lows.
Paying off a mortgage feels like it should be a good idea, but in this case paying it by liquidation of a pension fund is really a bad idea. Mortgage rates are very low right now, interest payments are still tax deductible to some extent, and you can roll the lump into a tax deferred account (which is really a one time opportunity). At least pay a few grand and get yourself a one time fee-based financial advisor before doing anything with your lump ... you will thank me for this suggestion many times over your next few decades.
30% of homeowners missed their payment in June. Similar numbers the last few months. The bubble will pop. So i would wait for that and buy cheap realestate in the suburbs.
Will pay off my mortgage then will only need to take small withdrawals to live off of.
I will roll it into an IRA to start and then am considering converting the whole to a Roth in one go. One would take a huge tax hit up front, but my normal planned withdrawals during retirement already put me close to the top bracket. The advance of taking the hit all at once is the Roth account then has the maximum amount of time to recover from the huge loss in principle and I would be protected from future tax rate increases (which almost have to happen given our current deficits)
Convert only enough each year so that it’s your sole income while living off your taxable account savings. That way you can also qualify for Obamacare subsides.
Most should slowly convert it to Roth IRA between now and age 70.5. Then withdraw at will tax free.
Buy my house in the hill country
Roll into IRA