Bill Woessner <woess...[at]gmail.com> wrote:
Re withdrawing all Roth contributions and enjoying the tax writeoff
for one tax year (assumed possible):
- quote -

What's a good way to compute the effects of losing the tax sheltering?
Can't we say around 15% to 30% (with today's tax rates) will be lost
to taxes? This loss would seem to trump the 9% return. Throw in that
the extra non-Roth income over time can raise the tax on your social
security income (see joetaxpayer.com for discussion), and I can't see
de-Rothifying.

Do you and your wife see tax rates going up? Two cents: I do.

I agree with Igor.

The main value of an IRA comes from two sources:

1) Tax free compounding
2) Shielding from bankruptcy

The value of tax free compouding depends on how long you plan on
keeping the money in an IRA. That obviously depends on your age, which
I do not recall that you posted. If you assume a 3% annual return, the
tax free compounding amounts to 1% per year, give or take. So the
value of such tax free compounding for 10 years would be about 11% or
so, for example.

Do not underestimate the value of bankruptcy protection. Things
happen. It could be the last money that you would keep.

i

- quote -

Who said anything about raiding my retirement savings? Why are you
assuming that this money wouldn't be invested for retirement? I said
nothing of the sort. You're making unfounded assumptions and putting
them in my mouth. Admittedly, you don't know me from Adam, but I
would hope that, as a fellow human being, you would extend me some
basic courtesies instead of attacking me off the bat.

--Bill

In article
<dd947f6a-7ef0-4548-9f64-237cdcdc41cc[at]w35g2000prg.googlegroups.com> ,
Bill Woessner <woessner[at]gmail.com> wrote:

- quote -

What do you plan to use for money once you retire? Are you
going to fight the cats and dogs for scraps from dumpsters?
If not, then you better be doing some retirement savings, and
the Roth IRA is about the best way there is. Do not even
think about raiding your retirement savings. Your $1400
in tax savings will end up costing you thousands in the
future.

-john-

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John A. Weeks III * * * * * 612-720-2854 * * * * * *john[at]johnweeks.com
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As of right now, my wife and I have combined losses of $9,418 in our
Roth IRAs. Our basis is $24K and the balance is $14,582. According
to my understanding IRS Pub 590, we can claim that loss on line 23 of
schedule A if we withdraw the entire balance of our Roth IRAs. My tax
software says doing so will increase my refund by $1,384.

First question (possibly more suited to misc.taxes): What are the
mechanics of doing this? Would we have had to make the withdrawal
during CY 2008? Or can we do it before April 15th and still claim the
loss?

Second question: Is this a reasonable thing to do? Obviously, this
would "unRothify" the $14,582. But the government will give us $1,384
to do so. That's an immediate 9% return. Not bad for government
work.

--Bill