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Message
re: So the wife quit her teaching gig, and...
Posted on 7/9/12 at 2:44 pm to shutterspeed
Posted on 7/9/12 at 2:44 pm to shutterspeed
quote:
Who's going to argue about a measly $250 anyway.
I wouldn't, but Obama is the President. He's very aggressively pursuing tax collections. He got the Swiss banks to turn over their records of investors in the USA and now he's going after people invested in IRAs.
States and parishes have gotten very aggressive since they are in a budget crunch. I dealing with a parish sales tax audit right now.
The auditors are taking some very aggressive positions they've never taken before.
2
Posted on 7/9/12 at 3:35 pm to meldawg399
From what I've read, the government wants to eventually get rid of that little $250 deduction and begin taxing teachers on educational enhancement funds received for supply purchases.
Posted on 7/9/12 at 4:22 pm to meldawg399
quote:
I dealing with a parish sales tax audit right now.
What parish if you don't mind me asking?
Posted on 7/9/12 at 4:25 pm to Corn Dawg Nation
Excuse my ignorance...but if your wife has worked in the public school system and been having retirement taken out of her paycheck, she can get a hold of that money when she quits? I ask because my wife is in the same position and thought that was money I would never see. How do you go about getting that?
Posted on 7/9/12 at 4:55 pm to thejudge
I worked for Teachers Retirement in LA for a few years...how many years service does she have?
The posts saying to be completely sure she will NEVER return to public school service have a point. That time will be expensive to buy back. I had people crying in my office all the time because they desperately wanted to retire, and the time was far more expensive to purchase than anticipated. Also, should she ever be in another public retirement system, many have reciprocity where that service can transfer, at least in part if not completely.
Are you sure her benefits would terminate when she is 85? When I worked there all benefits were lifetime, and their brochures still state that. It has been about 10 years since I worked there, though.
The posts saying to be completely sure she will NEVER return to public school service have a point. That time will be expensive to buy back. I had people crying in my office all the time because they desperately wanted to retire, and the time was far more expensive to purchase than anticipated. Also, should she ever be in another public retirement system, many have reciprocity where that service can transfer, at least in part if not completely.
Are you sure her benefits would terminate when she is 85? When I worked there all benefits were lifetime, and their brochures still state that. It has been about 10 years since I worked there, though.
Posted on 7/9/12 at 5:22 pm to eleventy
quote:
I ask because my wife is in the same position and thought that was money I would never see. How do you go about getting that?
The retirement lady she spoke with said what she put in is hers. 20% tax and 8% penalty to withdraw early
quote:
Are you sure her benefits would terminate when she is 85? When I worked there all benefits were lifetime, and their brochures still state that. It has been about 10 years since I worked there, though.
They through out 85 as an average life span for retirees during her numbers breakdown
Posted on 7/9/12 at 6:16 pm to thejudge
Put it in to a riskier higher return investment. A 65 year old retiree needs at least 1.1 million saved to retire if he wants to draw 50k a year. Assuming 3% inflation and a 5% annual return. At 22 K you've got a long way to go. Read rich dad poor dad.
This post was edited on 7/9/12 at 6:17 pm
Posted on 7/9/12 at 7:11 pm to LSURep864
quote:
Read rich dad poor dad
Will pick it up
This post was edited on 7/9/12 at 7:12 pm
Posted on 7/9/12 at 9:27 pm to Corn Dawg Nation
Why you curious corn? The parish is in SE LA.
This post was edited on 7/9/12 at 9:32 pm
Posted on 7/10/12 at 1:46 am to thejudge
Judge,
First thing to remember, don't rely on retirement personnel for tax advice. Talk with whoever does your taxes to get a true picture of your year end tax situation with each option.
In the interim, if she merely withdraws her retirement rather than rolling it over directly to an IRA, the retirement system is required to withhold 20% in Federal taxes and will hold more if she requests them to do so. Assuming your wife won't qualify for any exceptions to the 10% penalty if she withdraws her retirement, then the total Federal taxes that she will ultimately owe will be what bracket this extra income will fall into on your joint return plus an additional 10%. For instance, if her withdrawal falls into the 25% bracket on your return, then 35% is the actual taxes that will be due on the withdrawal. If that is the case, unless she requests 35% withholding rather than the standard 20%, you will definitely see a reduction in your refund which would be the best case scenario. If your refund doesn't take care of the additional 15%, then you will end up owing when your return is filed for the year she withdraws her retirement.
A withdrawal or monthly retirement checks from the La. Teacher's Returement System is NOT taxable on your Louisiana return. HOWEVER, if the retirement is rolled over to a traditional IRA and then withdrawn, the entire amount is taxable on your Louisiana return. When your wife reaches age 65, current La. law excludes the first $6,000 of retirement income from other retirement items such as an IRA. "Current law" is the key here as there are studies going on presently on what exemptions, credits, etc the state can stop in the future to try to bring in additional funds to the treasury.
To make a long story short, there are many things that need to be considered before y'all make your decision. If you prepare your own returns normally, my best advice would be to bring a copy of your latest return together with an estimate of your current years income and sit down with a tax professional BEFORE you make a decision. Too many times retirement offices or employers don't paint the true picture of the tax consequences of a retirement withdrawal. For some taxpayers, 20% withholding may produce a refund if little or no other income is involved. For other taxpayers, 20% withholding is simply not enough. FYI: The early withdrawal penalty has NEVER been 8%.
First thing to remember, don't rely on retirement personnel for tax advice. Talk with whoever does your taxes to get a true picture of your year end tax situation with each option.
In the interim, if she merely withdraws her retirement rather than rolling it over directly to an IRA, the retirement system is required to withhold 20% in Federal taxes and will hold more if she requests them to do so. Assuming your wife won't qualify for any exceptions to the 10% penalty if she withdraws her retirement, then the total Federal taxes that she will ultimately owe will be what bracket this extra income will fall into on your joint return plus an additional 10%. For instance, if her withdrawal falls into the 25% bracket on your return, then 35% is the actual taxes that will be due on the withdrawal. If that is the case, unless she requests 35% withholding rather than the standard 20%, you will definitely see a reduction in your refund which would be the best case scenario. If your refund doesn't take care of the additional 15%, then you will end up owing when your return is filed for the year she withdraws her retirement.
A withdrawal or monthly retirement checks from the La. Teacher's Returement System is NOT taxable on your Louisiana return. HOWEVER, if the retirement is rolled over to a traditional IRA and then withdrawn, the entire amount is taxable on your Louisiana return. When your wife reaches age 65, current La. law excludes the first $6,000 of retirement income from other retirement items such as an IRA. "Current law" is the key here as there are studies going on presently on what exemptions, credits, etc the state can stop in the future to try to bring in additional funds to the treasury.
To make a long story short, there are many things that need to be considered before y'all make your decision. If you prepare your own returns normally, my best advice would be to bring a copy of your latest return together with an estimate of your current years income and sit down with a tax professional BEFORE you make a decision. Too many times retirement offices or employers don't paint the true picture of the tax consequences of a retirement withdrawal. For some taxpayers, 20% withholding may produce a refund if little or no other income is involved. For other taxpayers, 20% withholding is simply not enough. FYI: The early withdrawal penalty has NEVER been 8%.
Posted on 7/10/12 at 2:09 am to thejudge
A couple of more things to consider in regard to your post about the school system being a political mess. I KNOW exactly what you are saying...however, there are good systems to work in such as the Zachary system from what I have been told.
Are you determined to live in the Parish you are now living in? Is this one of the less desirable systems to work and send your kids to school, therefore, you want your kids in a private school?
Basically, we have the same situation as described above and we have many teachers teaching in the public system simply to be able to afford to send their kids to a private school for a better education than they see happening in the public system. Private systems just can't afford to pay their teachers the same as public systems.
Another thought to play with your mind: If your wife does receive a monthly retirement check from the La. Teacher's Retirement System or other givernment or parish entity, an offset will be made to the social security benefit that your wife might qualify for such as a spousal benefit. There is so much that needs to be considered, especially in your wife's situation...don't rush into a decision. Get all of the facts so y'all can make an informed decision. Good Luck! ;)
Are you determined to live in the Parish you are now living in? Is this one of the less desirable systems to work and send your kids to school, therefore, you want your kids in a private school?
Basically, we have the same situation as described above and we have many teachers teaching in the public system simply to be able to afford to send their kids to a private school for a better education than they see happening in the public system. Private systems just can't afford to pay their teachers the same as public systems.
Another thought to play with your mind: If your wife does receive a monthly retirement check from the La. Teacher's Retirement System or other givernment or parish entity, an offset will be made to the social security benefit that your wife might qualify for such as a spousal benefit. There is so much that needs to be considered, especially in your wife's situation...don't rush into a decision. Get all of the facts so y'all can make an informed decision. Good Luck! ;)
Posted on 7/10/12 at 5:10 am to thejudge
Number one. If she's in a guaranteed-benefit plan and she has enough years in to get a pension when she reaches the eligible age, you can't match this with an IRA. You'd need almost 200K in an IRA to match the income stream from that pension.
Posted on 7/10/12 at 5:18 am to IKEtheTIGER
quote:
Excuse my ignorance...but if your wife has worked in the public school system and been having retirement taken out of her paycheck, she can get a hold of that money when she quits? I ask because my wife is in the same position and thought that was money I would never see. How do you go about getting that?
Good question. If she's a member of TRSL, she's in a defined-benefit plan that allows her to withdraw only the amount she has contributed. She may also be contributing to a deferred comp plan that is similar to an IRA. She can withdraw or roll over from that not only the amount she has contributed, but also any investment gains that have been realized.
Posted on 7/10/12 at 7:59 am to Layabout
quote:
thejudge
I am going through this same exact decision right now except i have a little more contributed. I am leaning towards leaving it in. Only for diversification sake. I think i could invest it through an IRA in index funds and do better, ie have a bigger lump sum of cash in 30 years or whenever. But, instead i'm gonna take the opportunity to diversify my investments.
Posted on 7/10/12 at 2:13 pm to meldawg399
quote:
Why you curious corn? The parish is in SE LA.
I'm over sales tax filing and remittance for the company I work for and hate dealing with local parish audits.
Posted on 7/10/12 at 9:09 pm to Corn Dawg Nation
Plaquemines.....I think their auditors find one big taxable transaction/event and then work their way through all the subcontractors and their subcontractors and such down the line.
Plaquemines seems to come after us every 3 years.
It is terrible to deal with (either filing or audits or both).
Plaquemines seems to come after us every 3 years.
It is terrible to deal with (either filing or audits or both).
Posted on 7/11/12 at 9:05 am to frb1951
quote:
frb1951
Solid info. Thanks. We will speak with our tax guy. Thanks for all the input from everyone.
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