Handling Potential Excess Income

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L1: Handling Potential Excess IncomeHello,
This question is about a new plan I am considering establishing. DOB=7/20/64 DFD=1/20/17
For the past couple of yearsI have been living off of earnings from various part-time work and withdrawals from my Roth (contributions made > 5 yrs. ago). As my Roth balance is shrinking, I now want to set up a SEPP to tap into my traditional IRA. The amount I would receive using the Amortization method plus this year’s expected wage earnings is about perfect for 2017. The problem is that future years’ wages are uncertain and could be significantly more than I will need when combined with the SEPP distributions. My question is whether I can set up another traditional IRA where I could move earnings from my job(s) that exceed what I need to live off of. The reason I want to consider doing this is to limit my income tax burden in near-out years in the event that my wages are more than I currently anticipate.
Thanks!2017-01-01 21:50, By: BobS, IP: []

L2: Handling Potential Excess IncomeYou have until 4/18/2017 to make a $ 6,500 contribution to your IRA. Depending upon your 2016 tax bracket, you could designate that contribution as a tax deduction or non-deductible contribution.
In any future years that you have wages or self-employment (business) income, you can do the same thing. If you work for a company, you can make deductible 401-K contributions. After you reach Jan 2019, if you leave that company, and if its plan allows, you can take partial distributions from their 401-K without having to set up a SEPP 72-T. So, this might be a plan for the next 2 years.
An experienced tax or financial advisor should be able to help you PLAN for the next few years.2017-01-02 01:35, By: dlzallestaxes, IP: []

L3: Handling Potential Excess IncomeThat’s exactly what I needed to know. Thank you!2017-01-02 02:20, By: BobS, IP: []

L4: Handling Potential Excess IncomeBob, just be very careful to keep the two IRAs totally separate and never transfer funds between them or the plan is busted. I recall a situation in the past where a SEPP participant made a regular IRA contribution to the SEPP account in error and it busted his plan.
NOTE: With these PT jobs you probably are not a participant in a retirement plan and therefore can deduct your TIRA contribution. And I assume you are not married to a high earning spouse which could increase joint income to where you could not deduct the TIRA contribution.2017-01-02 17:34, By: Alan S, IP: []

L5: Handling Potential Excess IncomeYes, I may even establish the new TIRA in a different brokerage firm just to make it harder to make the mistake of contributing to the SEPP account.
Your assumptions are correct: I’m not a participant in an employer plan and I’m not married to a high earning spouse.2017-01-03 16:14, By: BobS, IP: []