This is the time of year when you are probably receiving information about your taxes. I have been researching the matter and it would be impudent of me not to pass on some of the things that I have “learned.” I should warn you, however, that I have had to condense approximately 387 pages and 1,202 emails from various sources in the process. This includes materials from AARP, Micro and Macro Finance Ptd., Ltd., Help Age International, Senior Care for You, Oldies in Need, and others that I will not take time to mention. All of them have similar resources—lots, in fact bales, of facts, figures and data.
First of all you should “Rollover” anything that will roll, but especially big and fat IRAs. You will need lots of help for the bigger ones. Remember, an IRA is an “Individual Retirement Account” and contrasts with “Group Non-retirement or Working Accounts,” ones that our government will not allow to be rolled over. Over time they will accumulate bed sores and must be treated but, for the present, keep them well oiled.
There are many ways to rollover an account: grab the last sheet or paper in the list and firmly move it to the top of the list—called a one sheet or bottom sheet rollover. You can also do a “middle of the bundle” rollover, but this requires more dexterity than most old folk have. To do one of these, get your grandchild to help you.
The question is—naturally—where do I roll them to? That is a question that Mr Roth has been waiting for you to ask. If you don’t have an e*trade tax-free growth potential or a Schwab 401(k), you may be barking up the wrong tree and want to consult the Roth IRA conversion calculator. It is there to help you but must be used before the conversion deadline.
But wait a moment! Who is Mr Roth and why should I trust him for advice? Actually Hyman Roth (born Hyman Suchowsky) is a fictional character but represents a financial investor who was Teacher of the Year in 1917 at a school in Georgia. His son, Winston Roth, worked for the IRS and came up with a way to save clients tax money. However, his scheme came to the attention of J Edgar Hoover and he was incarcerated and given a 25 year sentence for “intent to knowingly help tax payers evade arrest and getting their accounts cleaned out.”
That is the last anyone has heard of Winston who, reputedly, was thrown into a license-making machine at a Federal Prison in upper New York state. Some say that bits of him can be found on the New York personalized vanity plates.
Winston’s brother, Vinnie, fared a bit better—for a while. He, like Winston, worked for the IRS, but as a Rollover Investigator, third class. His duty was to make sure that all IRAs were rolled in the proper direction—to the left and not to the right. Vinnie got careless, however, and one day rolled an IRA to the right. It burst into flames and a whole warehouse of tax returns went up in smoke—as did Vinnie when he was convicted of IRA negligence and electrocuted.
The final Roth sibling was Ed “Big Daddy” Roth who could roll almost anything over. His demise came when a stack of IRAs belonging to Ronald Trump fell over and crushed him. Mr Trump was very distraught and is quoted as saying “Ed meant to make America great again and I mean really great, like I have made it great.” It is rumored (by CNN) that President Trumps has TLS, or Tax Loophole Syndrome, but this is not confirmed.
All this is by way of background to show you that rolling over an IRA is serious business indeed. You should not attempt this if you tend to have vertigo with a circular motion. Much better to consult a Rollover Specialist, senior rank, and let him or her (rollovers know no gender) do it for you. It will cost you a bit of money—the Specialist will send you a formula of how the charges are computed and you will be advised that the consultation can be claimed as a deduction on your income tax.
I was about ready to rollover my IRA when I learned that I didn’t need to. I wasn’t in a bracket high enough whereby the move would benefit me. If I had been rolled into that higher bracket I would have had to pay 12% more income tax and, even though I got money back last year, I was frightened about the process.
I can see now—although dimly—how painful the rollover would have been. There would have been severe bruises on my side, either left or right, the IRS might find me “a person of interest,” and I would need a Tax-Back therapist.
I think I’ll consult AARP for some more advice—they have a Foundation’s Tax Aide Program and, if I learn all the loop-holes, I might become a volunteer Tax-Aide consultant.Tax time 2018