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Two Months into my New Job

January 18th, 2015 at 09:50 pm


I thought I had updated this blog before now, but I think I wrote a long post that somehow got "eaten" before it was posted, and I didn't have the time or energy to write again at that time. This post, I have learned better and I am drafting it in Word and cut & pasting it into a blog posting.

So, I am now two months into my new job. It's gone quickly. Up until now, I have been focused on doing tax projections for people's 2014 tax returns. Before year-end, the projections were done with a mind to any last-minute year-end tax planning we could do; then the past two weeks have been focused on ensuring that clients' estimated tax payments are sufficient to meet the "safe harbors" to avoid penalities.

Now I'll be switching to focus more on estates and trusts, then back to taxes when we put out "tax packages" to clients' accountants with their investment earnings reported.

There's been (and continues to be) a steep learning curve, as my predecessor didn't document things as well as he might have, but I feel like otherwise there is good support at work and like I am fitting in as part of the team.

It's nice to be able to save again for retirement. For the past few years, I have been taking from my inherited IRA accounts (when you inherit an IRA, you have to take required minimum distributions just as the original owner would have). Ideally, one takes the RMD, pays the tax, and puts it into a Roth, losing nothing in terms of retirement savings, but for the past 2 years, I have been taking my RMD (and then some) and using it to supplement my low wage income. I've also accumulated an uncomfortable amount of non-mortgage debt, so this year, once again, I'm taking my RMD, using it to reduce a portion of the debt load, but from now on, I expect to go back to using the RMD to put into a Roth. It will take somewhere between 12 to 18 months to pay off the debt I've accumulated, depending on how much of my current income I can put towards that goal. I also have some home repairs that need doing, and I need to pay for another certification program, so I'll see just how quickly I can pay the debt down. But in general, I figure I can live frugally on 50% of my take-home, so that leaves me the other 50% for debt repayment, retirement and other savings, and extraordinary expenses. For now, I'm putting just 10% for retirement, but after the debt gets paid, I'll up that substantially. I might also look, later this year, into getting a home equity loan to pay for that new roof and some other work on the house--that has the advantage of adding to tax deductions. While I don't like debt, I'm also not averse to using it as leverage when I'm in the position to be able to pay the debt off quickly.

8 Responses to “Two Months into my New Job”

  1. rob62521 Says:

    Congrats on the new job!

  2. Dido Says:

    Thanks!

  3. PatientSaver Says:

    I'm glad the job is working out well.

    That's interesting, I didn't know that when you inherit an IRA that you have to take the RMD even if you're under 59.5. Would your current employer pay for your studies?

  4. Dido Says:

    Yes, when you inherit the IRA, you also inherit the responsibility to distribute. You can (currently) either take everything within 5 years or do the RMDs and distribute it over your lifespan, starting in the year after the decedent dies. There's a move in Congress to eliminate the second option and make everyone take everything out within 5 years to get the taxes into government coffers sooner. Praying that one doesn't happen!

    My employer might, but my salary is good, and the cost of the program is not exhorbitant, so I don't want to ask now. If my job performance is good several months in, I might ask him to pay for the review component of the course. But the long-term outlook of the job is sunny enough, including, ideally, eventual equity in the firm, so that I'm not going to ask at this point.

  5. FrugalTexan75 Says:

    Do you have to pay taxes on the whole amount you take out, or only on the earnings from what had been deposited? I hadn't realized you'd have to pay any taxes on inherited ROTHs.

  6. Dido Says:

    Laura, if it's an inherited *ROTH*, no tax. The donor paid the tax on that income before putting the money into the Roth, so it won't be taxed again. But the beneficiary DOES have an RMD...you are supposed to use that money up over your life, as opposed to letting the money ride forever. The original owner of the income doesn't have an RMD on the Roth, only on traditional RMDs. The beneficiaries of the Roth *do* have RMDs.

    Where tax applies to the beneficiary is on inherited TRADITIONAL IRAs. Then, just as with the original owner, the tax will be at the ordinary income rate, and it will be on the full amount. This is true for the original owner as well

  7. snafu Says:

    Welcome to SA. Wishing you we;; in your new career.

  8. Dido Says:

    Thank you!!

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