For Those With Add-On CD's---

Ally6770 | Sep 13, 2021 | 4,324 posts since 2010

If you have a limit for your add-on CD, I just found out that the contributions that you have made counts and it does not include the interest you have earned.

I have just called and found out that I can add over $11,000 to that Roth IRA add-on CD that I have this year. I was way over the limit for IRA insurance and took out the amount that it would be at the limit in 5 years for that 4.2% CD for IRA's. Left an amount there in that CD and when the add-on came they let me get that one cuz the interest was higher, but it had a limit.

They do not include the interest earned on that CD for the top amount. I was thinking of not doing a conversion this year cuz the rates are so low and the traditional IRA's and the add-on CD for my Roth are within 1/2% of the same interest earned. I called and she said just your additions are counted and not the interest.

If you have add-on CD's and are near the limit call them to see if the top amount for it includes interest earned.

Maybe you all know this I did not.

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111 | Sep 13, 2021 | 672 posts since 2019

Thanks for the info., but you didn't say which financial institution that you found this was true for. Different FIs could well have different policies on this - I'm fairly certain that this issue (limits for add-on CDs), is not one of the areas where FDIC or NCUA mandates all their members to do things in a certain way.

I do know that Navy CU has the policy of counting only principal against the add-on limit, not interest.

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Ally6770 | Sep 14, 2021 | 4,324 posts since 2010

This one was at Navy Federal. I usually convert to the Roth at the end of Dec and put it in their Roth savings until Jan 2 and then add it to an existing IRA I have with them but with the add-on I could do it when ever I found out what my income was and do as much as I can to stay below the magic number.

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hank | Sep 18, 2021 | 110 posts since 2016

By magic number, do you mean the level of income to put you in a higher tax bracket? I am thinking of doing some Roth conversions that I have never done before.

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Ally6770 | Sep 18, 2021 | 4,324 posts since 2010

I am retired. The magic number to stay below is the IRMMA so your Medicare premium will not go up.

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blazer9 | Sep 19, 2021 | 228 posts since 2019

https://www.medicareresources.org/medicare-eligibility-and-enrollment/what-is-the-income-related-monthly-adjusted-amount-irmaa/

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Choice | Sep 19, 2021 | 937 posts since 2020

Isn’t the other factor, the tax bracket one wants to be in?

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Ally6770 | Sep 20, 2021 | 4,324 posts since 2010

To stay at the lowest Medicare premium whether it is a single or a jointly filing the tax bracket should be 22% for both. The taxable income is several thousand dollars below the IRMMA. Remember the lower tax brackets for those of us in the lower brackets stop on, I believe, July 1, 2024 so there isn't much time to do it with the lower income tax. Of course 2024 is a presidential election year so the politicians will have a field day. Already there is a politician trying to hold up the voting by the senate until 2022 which just happens to be an other election year.
Here are the projected 2022 federal income rates if you have not seen them. https://www.accountingtoday.com/news/inflation-brings-big-changes-in-tax-brackets

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Choice | Sep 20, 2021 | 937 posts since 2020

Ergo, 22% or…income tax bracket is acceptable….which corresponds to x income and y tax coupled with no IRMMA “surcharge.” What if one wanted to have zero income taxes and pass the funds to heirs. What is the downside to latter? Thanks

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Ally6770 | Sep 20, 2021 | 4,324 posts since 2010

You would have to consider what income tax rate the kids are in, how close to retirement they are and what is more important to you giving the children tax free income when you die or not paying income taxes. They will have 10 years to spend it and could it in the last year. Are they near retirement? What about just converting a smaller amount a little each year.

1

Choice | Sep 20, 2021 | 937 posts since 2020

Multifaceted issue…but tax laws may change…some like after tax assets and cash! Again, thanks! PS I’m reminded of the recent endeavor to recover their safe deposit funds after a search/seizure of box assets by the feds…the box holder has to prove they lawfully acquired the assets rather than the feds proving otherwise…magistrates issue the warrants.

1

Ally6770 | Sep 20, 2021 | 4,324 posts since 2010

I read that article about the FBI. That was not a bank safety deposit box but ran by a private company. I worked in a bank for 30 years and was twp treasurer for 23 years many things go on. When that money is in banks deposit boxes the new customers will ask you how much can I keep in it. Is it insured? What happens if there is a fire? Do banks have to report it if I put money in my box? The criminals or people hiding things sure as stupid questions. The ones who think they are smarter go to privately own boxes but they are watched also, but just don't know it. There are reasons they go to private boxes.
We moved to this town in 2011 and in 6 months I had closed down a restaurant just cuz I had a bad feeling when I walked into it and left. I called up a state policeman I knew who had retired and he called the local police department and told them. If I, a woman in her 70's walked in to the police department and said I had a bad feeling when I walked into a very popular restaurant they would have locked me up as a crazy person. They watched it and got them for laundering money and tax evasion. Same when I was going for a hair cut and was behind a car at the red light that had no license plates. I followed it took a picture of it and they turned down a street and in 4 blocks it turned into a dead end street and they turned into a driveway, the 4 four of them ran into the house and left all 4 car doors wide open. I turned around at the end of the street took another picture of the car with 4 open doors and emailed the picture of the car and house to the police department after my hair cut. They got them for drugs and found guns and money. I turned in the person who was the sponsor of the city basketball team my husband played on. He went to prison. Turned in a pharmacist who was also a trustee of the township when I was treasurer he was double billing for prescriptions and got him also for tax evasion. I turned in my husband's sister for stealing from her mother who had dementia.
If you see something do something or you are part of the problem. Every decision you make has many elements you have to decide the pros and cons before you make a decision on what to do.
We live and die by the choices we make throughout our lives.

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lou | Sep 28, 2021 | 1,004 posts since 2010

Don't remember an add-on 4.2% 5yr IRA certificate at Navy Fed. Are you sure about this?

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Ally6770 | Sep 29, 2021 | 4,324 posts since 2010

I wrote--
I was way over the limit for IRA insurance and took out the amount that it would be at the limit in 5 years for that 4.2% CD for IRA's.

I was over the limit in the Roth IRA CD at Navy. I took out over 200,000 for a Roth IRA CD for 4.2% at another credit union and that new CD would be over the limit also in 5 years when the last interest payment is made. I am not over the limit in the add-on CD at Navy and they count only the additions and not the interest. So I can add up to $11,000 this year. I will wait until the final estimates are made in Oct for IRMMA and then stay between $500-$1,000 below that number with the conversion I make for this year.

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