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General Discussion => Post-FIRE => Topic started by: RumBurgundy on September 22, 2019, 12:18:39 PM

Title: Working for the IRA?
Post by: RumBurgundy on September 22, 2019, 12:18:39 PM
Anyone else that's post-FIRE considering part-time work just to get enough earned income to max out the IRA every year?

There's something next to impossible about the transition to go from accumulating assets to maintaining assets, for me at least. Maybe that transition would've been easier had I been older. In the meantime, though I don't need it, with nearly 3 decades before I qualify for SS, it seems downright inefficient to let all these years of potential IRA contributions pass me by.

Curious how many others struggle with that "use it or lose it" mentality in this regard.
Title: Re: Working for the IRA?
Post by: seattlecyclone on September 22, 2019, 01:34:47 PM
Nah, I won't be working just to fill up the IRA. Any paid work I do will be because I view it as an intrinsically interesting way to use my time. I will of course do things like IRA contributions that make sense from a tax perspective given whatever work I happen to be doing anyway, but I don't need the money and a small tax break isn't going to be enough to cause me to spend a bunch of time doing some job I wouldn't have done otherwise.
Title: Re: Working for the IRA?
Post by: RumBurgundy on September 22, 2019, 03:35:44 PM
but I don't need the money and a small tax break isn't going to be enough to cause me to spend a bunch of time doing some job I wouldn't have done otherwise.

I was thinking more about the lost potential of decades of tax-free compound interest in a Roth IRA than the tax break on a conventional IRA contribution. Sorry, should've been more specific.
Title: Re: Working for the IRA?
Post by: seattlecyclone on September 22, 2019, 04:00:08 PM
How valuable is that "tax-free compound interest" really? If you have a relatively reasonable retirement income the current laws have you paying no federal tax on dividends and capital gains in taxable accounts. Sure, laws may change or your income may go way up for some reason, but under the current state of affairs I just can't attach a significant number on the benefit of shifting $6k/year from taxable to Roth. It's worth something, so I'll do it if I have the opportunity, but it's not going to dictate how I spend my time.

You're FI. You don't need the money. If you're going to go get a job, find some non-monetary reason that you want to do it.
Title: Re: Working for the IRA?
Post by: markbike528CBX on September 22, 2019, 04:37:47 PM
The Irish Republican Army is unlikely to be a 501(c) charity or even have a US tax ID number.  I guess I'm dating myself by the reference.
Title: Re: Working for the IRA?
Post by: ScreamingHeadGuy on September 23, 2019, 07:45:16 PM
I have been wondering about this same thing, but from a somewhat different angle. 

Instead of earning $6000, investing it into a Roth, and then withdrawing money from another account to cover my expenses why not just spend the $6000 I earned and leave the money in my account to grow?  The amount in the account is the same either way and earning the same return.  Is there any advantage to making a new contribution vs. leaving old money in? 
Title: Re: Working for the IRA?
Post by: seattlecyclone on September 23, 2019, 08:24:12 PM
I have been wondering about this same thing, but from a somewhat different angle. 

Instead of earning $6000, investing it into a Roth, and then withdrawing money from another account to cover my expenses why not just spend the $6000 I earned and leave the money in my account to grow?  The amount in the account is the same either way and earning the same return.  Is there any advantage to making a new contribution vs. leaving old money in? 

Both could be perfectly valid options! To make a Roth contribution you may need to liquidate some more shares from your taxable account than you would if you didn't make an IRA contribution. This could cost you some money this year, but you'd be reasonably certain that this $6,000 you moved to Roth will never be taxed again. This may or may not be a good tradeoff, depending on the particulars of your tax situation.
Title: Re: Working for the IRA?
Post by: reeshau on September 24, 2019, 02:30:43 AM
The Irish Republican Army is unlikely to be a 501(c) charity or even have a US tax ID number.  I guess I'm dating myself by the reference.

This was my first reaction, too...
Title: Re: Working for the IRA?
Post by: ontheway2 on September 24, 2019, 07:59:01 AM
I have been wondering about this same thing, but from a somewhat different angle. 

Instead of earning $6000, investing it into a Roth, and then withdrawing money from another account to cover my expenses why not just spend the $6000 I earned and leave the money in my account to grow?  The amount in the account is the same either way and earning the same return.  Is there any advantage to making a new contribution vs. leaving old money in?

Contributing could allow one to get the saver's credit. It seems weird to withdraw and also contribute in the same year, but the savers credit might make it worth it
Title: Re: Working for the IRA?
Post by: seattlecyclone on September 24, 2019, 08:42:55 AM
You generally can't claim the savers credit when you're withdrawing from your retirement accounts, but if you're drawing down just your taxable account while contributing to an IRA that credit could certainly apply. Good point!