Author Topic: Helping my parents with finances - 0% LTCG rates if taxable income <$75k?  (Read 1185 times)

KiloRomeo

  • 5 O'Clock Shadow
  • *
  • Posts: 88
My parents have a real cluster of investments including life insurance policies, annuities, significant cash holdings and a 401k. I'm trying to help them navigate through this and clean things up. First up is the cash holdings and the taxable accounts with high expense ratios.They also have ~$14k  invested in Microsoft and Intel (actually a significant chunk of their total portfolio.). If I sold all of this they would have around $9k in LTCG. Am I correct in thinking that if I sell this and their taxable income (line 43) is under $75k they will pay 0% on this gain? They are right at the limit but they can up their 401k contribution and IRA contribution to get below.

Once I sell everything I plan on putting it in the Vanguard 2020 Target fund.

Does this sound like a reasonable plan to you?

MDM

  • Walrus Stache
  • *******
  • Posts: 8705
Re: Helping my parents with finances - 0% LTCG rates if taxable income <$75k?
« Reply #1 on: November 24, 2016, 11:32:39 AM »
Am I correct in thinking that if I sell this and their taxable income (line 43) is under $75k they will pay 0% on this gain?
Yes.

Quote
Once I sell everything I plan on putting it in the Vanguard 2020 Target fund.
Does this sound like a reasonable plan to you?
Doesn't look unreasonable.  Would need more info on their overall financial picture, life expectancy, desired spending, etc., to comment more.  And ultimately it would be up to their risk tolerance, which only they would know.

KiloRomeo

  • 5 O'Clock Shadow
  • *
  • Posts: 88
Re: Helping my parents with finances - 0% LTCG rates if taxable income <$75k?
« Reply #2 on: November 24, 2016, 12:05:27 PM »
Am I correct in thinking that if I sell this and their taxable income (line 43) is under $75k they will pay 0% on this gain?
Yes.

Quote
Once I sell everything I plan on putting it in the Vanguard 2020 Target fund.
Does this sound like a reasonable plan to you?
Doesn't look unreasonable.  Would need more info on their overall financial picture, life expectancy, desired spending, etc., to comment more.  And ultimately it would be up to their risk tolerance, which only they would know.

Financial outlook I would say good. They are 5-10 years away from a partial retirement and that's really only because my Dad has a really great job that he loves. Financial picture is OK/good. They don't have much of a nest egg IMO (call it around $180k) but they have pretty low expenses and little to no debt. Up until last year I would have said they are in excellent health but my dad was recently diagnosed with Lymphoma. I will say treatment has been going well but you never know. Desired spending I think they will be fine with what they end up with for SS/Savings. Being closer to retirement I would say a lower risk tolerance. I just want to help them organize their accounts and get out of the high ER funds and the significant cash holdings.

MDM

  • Walrus Stache
  • *******
  • Posts: 8705
Re: Helping my parents with finances - 0% LTCG rates if taxable income <$75k?
« Reply #3 on: November 24, 2016, 12:27:56 PM »
Financial outlook I would say good. They are 5-10 years away from a partial retirement and that's really only because my Dad has a really great job that he loves. Financial picture is OK/good. They don't have much of a nest egg IMO (call it around $180k) but they have pretty low expenses and little to no debt. Up until last year I would have said they are in excellent health but my dad was recently diagnosed with Lymphoma. I will say treatment has been going well but you never know. Desired spending I think they will be fine with what they end up with for SS/Savings. Being closer to retirement I would say a lower risk tolerance. I just want to help them organize their accounts and get out of the high ER funds and the significant cash holdings.
Being that far away from retirement, and with however many years expected in retirement, it might be worth considering something with more stock content than the 2020 fund.  Also, if the higher earner can delay SS until age 70, that's another good protection against running out of money in later years.  But it's up to them....

KiloRomeo

  • 5 O'Clock Shadow
  • *
  • Posts: 88
Re: Helping my parents with finances - 0% LTCG rates if taxable income <$75k?
« Reply #4 on: November 28, 2016, 11:28:46 AM »
Thanks MDM. I'll be sure to consider your suggestions moving forward.