g: 1 Posted By: walkerbait
Views: 29 Replies: 0 The original threadwasn't real long but had a lot of very useful information in it to anyone in this position. Since that thread was archived and I would like some feedback on my plans, I thought I'd post a part two to catch any recent updates and help anyone else out in the process.
I expect to be deployed for 9 months out of this calendar year to a combat zone, which is going to make my earned income very artificially low for 2014. I want to make sure that I am managing everything appropriately so that I can maximize the benefits. I expect my earned income, not including my combat exempted pay, to fall right around $22k for the year, which includes a small bit of income from a side business. I am married with 3 kids, and my wife stays at home.
I will continue to max my own and my wife's Roth IRA ($11k), and also plan to max the Roth TSP ($17,500). I will definitely max the SDP which will provide 10% interest on $10k, tax free, for the deployment + 90 days after. I won't be able to contribute to the SDP until I've been deployed 30 days and I plan to two it over two months ($5k each month since I cannot exceed net pay).
I can qualify for the Earned Income Tax Credit, which is $6143 and refundable, but I have to make sure my "investment income" stays below $3300. Based on last year, I expect to have about $1450 in investment income, unless something significantly changes. A significant chunk of that comes from stocks which are not yet in capital gains territory but will be in August ($2k in unrealized gains).
I calculate our standard deduction + personal exemption to be $31,900, which means I *could* consider rolling some of my wife's 401k into her Roth IRA without paying any tax on it. Only about 10% of my net worth is in that 401k, whereas about 40% is in a Roth account.
I am considering contributing some additional money to the traditional TSP (can contribute up to $52k total since I will be deployed). The downside is that if I do contribute to that the money is stuck until retirement age without penalty (AFAIK one cannot withdraw contributions, even if tax-exempt, without an early withdrawal penalty). I have tried to keep a decent chunk of cash available to get into an investment property, but I haven't spent the time to find the right opportunity yet.
Some of my questions:
Should I sell some or all of the stock before it gets into capital gains territory? I'd really like to hold the stock long term, but if I can sell now and buy a few months later at a significant tax advantage I have no problem doing that. Does that profit (non-capital gains) count toward investment income or toward earned income?
Should I do a partial rollover of the 401k to Roth IRA?
Is there anything I am missing?
For what it's worth, I will not qualify for the EITC or retirement savings credit for the foreseeable future (i.e. no more deployments).
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