Living

To convert or not to convert?

That is the Roth IRA question

Published

13 years ago

March 3, 2011

With its highly prized feature of creating tax-free retirement income, much attention has been focused on Roth Individual Retirement Accounts (IRAs). The heightened interest in Roth IRAs is due to the removal of the income limitation preventing many owners of Traditional IRAs, or other eligible retirement accounts, from converting all or a part of the account to a Roth IRA. Prior to 2010, investors with an annual adjusted gross income of more than $100,000 were not allowed to convert.

(Note: Income limits still exist on the ability to contribute to a Roth IRA. For 2011, single taxpayers with an adjusted gross income of more than $122,000 [$177,000 if married filing jointly] are not permitted to make Roth IRA contributions.)

With the elimination of the income limitation, does it make sense to convert a Traditional IRA or other eligible retirement balance to a Roth IRA now or in the future?

First, a quick summary of the difference between a Traditional IRA and Roth IRA. With a Traditional, the contribution is typically made on a pre-tax basis, meaning it was not taxed and reduces your taxable income in the year of contribution. The account offers tax-deferred growth potential, but the funds are taxed as income when withdrawn. Things are somewhat flipped with a Roth IRA: the contribution is made on a post-tax basis, meaning it was taxed. The main advantage of the Roth is that, in addition to tax-free growth potential, the funds are tax free when withdrawn.

Another difference is that distributions from a Traditional are mandatory in the year you turn 70 and a half, while there is no distribution requirement for a Roth (the withdrawals are tax free, so the IRS does not care if you ever take the money out).

To convert or not to convert? That is the Roth IRA question.

Although everyone’s situation is unique, the main factors to consider before making the conversion decision include:

Future income taxes – the amount converted is taxable income, so you pay taxes on the money now, rather than when you withdraw the money in retirement. If you expect to be in a higher tax bracket when you retire, a Roth conversion may be a smart strategy. In addition, if you expect tax rates to rise, a conversion may be a savvy move. With the burgeoning national budget deficit and debt, is this unlikely? The tax cost is crucial: if you convert, how much tax will you pay now versus what you expect to pay when you withdraw the money during retirement?

Investment time horizon – the benefits of a conversion will generally increase the longer your money remains in the Roth IRA. If your time horizon is less than five years, the conversion probably will not make sense since amounts withdrawn from Roth accounts open less than five years are subject to a 10 percent penalty.

Source of funds for tax payment – you should generally avoid using money from the conversion to pay the taxes and instead use non-retirement funds. Using conversion proceeds reduces the amount that can potentially grow tax free in the Roth IRA. In addition, if you are under 59 and a half, there is a 10 percent penalty. If you do not have enough non-retirement money to pay the conversion income taxes, one option is to convert smaller amounts. Additionally, even if you can afford to pay the taxes on the entire amount, you might want to consider partial conversions over several years so the income from the conversion is not taxed in a higher bracket than your current one.

Although a conversion does finally provide many high-income investors the opportunity to have a Roth IRA, these considerations add complexity to the conversion decision. However, don’t worry. If you decide after completing a conversion that you made a mistake, the IRS allows you to undo all or part of the conversion (a process called “Recharacterization”) up to Oct. 15 of the year after the conversion.

This article is for informational purposes only and is not financial, legal or tax advice. Please consult with your adviser before making any decisions.

Real Estate

The rise of virtual home tours

Adapting to changing consumer preferences in spring real estate

Published

2 hours ago

April 26, 2024

Jeff Hammerberg

Looking for a home? Virtual tours hold special benefits for queer buyers.

In today’s dynamic real estate market, the spring season brings not only blooming flowers but also a surge of activity as buyers and sellers alike prepare to make their moves. However, in recent years, there’s been a notable shift in how consumers prefer to explore potential homes: the rise of virtual tours.

For the LGBTQ community, these virtual experiences offer more than just convenience; they provide accessibility, safety, and inclusivity in the home buying process.

Gone are the days of spending weekends driving from one open house to another – unless that’s your thing of course, only to find that the property doesn’t quite match expectations. With virtual tours, you can explore every corner of a home from the comfort of your own space – find something interesting? Schedule a showing with any LGBTQ Realtor at GayRealEstate.com.

This is particularly significant for LGBTQ individuals, who may face unique challenges or concerns when attending in-person showings. Whether it’s the ability to discreetly view properties without fear of discrimination or the convenience of touring homes located in LGBTQ-friendly neighborhoods across the country, virtual tours offer a sense of empowerment and control in the home buying process.

Moreover, virtual tours cater to the diverse needs of the LGBTQ community. For couples or families with busy schedules or those living in different cities or states, these digital walkthroughs provide a convenient way to view properties together without the need for extensive travel. Additionally, for individuals who may be exploring their gender identity or transitioning, virtual tours offer a low-pressure environment to explore potential living spaces without the added stress of in-person interactions.

At GayRealEstate.com, we understand the importance of adapting to changing consumer preferences and leveraging technology to better serve our community. That’s why our agents offer an extensive selection of virtual tours for LGBTQ individuals and allies alike – visit our website, choose an agent and within minutes you’ll have access to the Multiple Listing Service (MLS) via their website.

From cozy condominiums in bustling urban centers to sprawling estates in picturesque suburbs, virtual tours showcase a wide range of properties tailored to diverse tastes and lifestyles.

In addition to virtual tours, GayRealEstate.com provides comprehensive resources and support to guide LGBTQ buyers and sellers through every step of the real estate journey. Our network of LGBTQ-friendly agents is committed to providing personalized service, advocacy, and representation to ensure that all individuals feel respected, valued, and empowered throughout the process. Plus, we are happy to provide a free relocation kit to any city in the USA or Canada if you are a home buyer.

As we embrace the spring season and all the opportunities it brings in the real estate market, let’s also celebrate the power of virtual tours to revolutionize the way we find and experience our future homes. Whether you’re searching for your first apartment, forever home, or investment property, GayRealEstate.com is here to help you navigate the exciting world of real estate with confidence, pride, and inclusivity.

Jeff Hammerberg is founding CEO of Hammerberg & Associates, Inc. Reach him at [email protected].

Advice

Should I divorce my husband for the hot new guy in our building?

Debating whether to leave or stay after the sex goes cold

Published

9 hours ago

April 26, 2024

Michael Radkowsky

Dear Michael,

I’ve been with my husband for 10 years and the sex is pretty much gone. It stopped being exciting a long time ago and pretty much the only time we ever do it is with the occasional third.

A really hot guy moved into our building about a year ago. We would see each other sometimes in the elevator or at our building’s gym and we started talking and really hit it off. Mark is 15 years younger than I but we seem to have a lot in common. We started hooking up and the sex is amazing.

I haven’t told my husband because it’s breaking our rule about no repeats. I have to say that the secrecy is hot. It’s kind of a thrill to take the elevator upstairs when I say I’m going on an errand. But it’s more than that. I have a connection with Mark that is far more amazing than what I have ever felt with my husband. Not just the sex. We just enjoy being together, talking about anything and everything.

My husband went to visit his family last weekend and I spent the whole time with Mark. Since then I can’t stop thinking that I want to leave my husband and be with Mark.

Part of me thinks this is a crazy mid-life crisis. I mean, this kid’s in a totally different place in life. But we have mind-blowing sex and a fantastic connection. I’d like your thoughts on how to proceed.

Michael replies:

You’ve got a lot to consider.

First: Sex with a long-term partner changes over time. It tends to be less about erotic heat and more about the connection with a person whom you love. In other words, it’s being with the person you’re with that makes the sex meaningful and even great. Having a good sexual relationship with a long-term partner comes far more from a heart connection than from a crotch attachment.

Second: You seem ready to throw your relationship under the bus pretty quickly, without addressing other problems in the relationship besides sex. When you are sneaking around, lying, and rule-breaking , I don’t see how you can look your husband in the eye; and if you can’t look him in the eye, you certainly can’t have even a half-way decent relationship.

Yet another point to consider: Affairs pretty much always seem more exciting than marriage. The partner is new, which almost automatically makes the sex hotter; the secrecy is a thrill; and you don’t have to deal with paying the rent, house chores, and all the petty annoyances of living up-close with someone day-in, day-out.

You are bringing lots of energy to your affair, and everything about it is exciting. You are bringing no energy — at least no positive energy — to your marriage. You get what you put into a relationship.

Divorce is not something that should be entered into lightly. Be aware that if you leave your husband for Mark, you will no doubt find over time that the sex becomes less exciting and that the connection is not always fantastic. No surprise, 75 percent of marriages that begin with affair partners end in divorce. While I don’t think statistics predict what will happen to any particular couple, believing that you will have a significantly better relationship with your affair partner than you did with your husband sets you up for likely disappointment.

Many gay men focus on “hot sex” as the big draw, pursuing a lot of sex with a lot of men, and/or pursuing an ongoing series of relationships that last until the sex cools. If that’s what you want, that’s fine. But it’s a different path from pursuing a close and loving long-term relationship, which involves knowing someone well and having him know you well; collaborating on getting through the hard stuff life throws at us; finding ways to make peace with disappointment; and consistently striving to be someone worth being married to.

How to proceed? While you are the only person who should make that decision, I would suggest that whatever your choice, keep in mind that marriage can be more than what you’ve made of it, so far.

Michael Radkowsky, Psy.D. is a licensed psychologist who works with couples and individuals in D.C. He can be found online at michaelradkowsky.com. All identifying information has been changed for reasons of confidentiality. Have a question? Send it to [email protected].

Autos

Sport haulers: Jeep Grand Cherokee, Mercedes GLE-Class

Updated cabins, adept handling, and more

Published

6 days ago

April 20, 2024

Joe Phillips

Jeep Grand Cherokee

Now that March Madness and the Masters are over, it’s time for, well, everything else. For my husband and me, this means water sports, as in kayaks and rowing sculls, which is why we trekked to the Potomac for the George Washington Invitational regatta last weekend.

Alas, high winds splashed cold water on the event, canceling much of it. But there was still plenty of spirited camaraderie to rival “The Boys in the Boat.”

And I was reminded of my time years ago as a rower with D.C. Strokes, ferrying teammates to races up and down the East Coast. Back then my ride was a dated, rather cramped four-door sedan.

If only we could have paddled around in a sporty SUV like the two reviewed here. Now that would have been some smooth sailing (wink-wink).

JEEP GRAND CHEROKEE

$40,000

MPG: 19 city/26 highway

0 to 60 mph: 7.5 seconds

Maximum cargo room: 37.7 cu. ft.

PROS: Updated cabin, adept handling, strong towing

CONS: So-so gas mileage, no third row, pricey trim levels

IN A NUTSHELL: Rough, tough and buff. It’s doesn’t get much more butch than a Jeep. This year’s Grand Cherokee is no exception, with rugged looks, expert off-road capability and better-than-average towing capacity of 6,200 pounds.

There are a dizzying number of trim levels—more than a dozen—starting with the barebones base-model Laredo at an affordable $40,000. The lineup tops out with the Summit Reserve 4xe PHEV, which is almost twice the price at $76,000 and one of various plug-in hybrid versions available. Those plug-in hybrids can drive up to 25 miles on all-electric power before the four-cylinder gas engine kicks in. Otherwise, you can choose from a standard V6 or V8. Gas mileage on all trim levels is basically the same as the competition.

Where the Grand Cherokee really shines is in the handling. More refined than a Wrangler but less lavish than a Land Rover, this Jeep maneuvers just as well on city streets and highways as it does on bumpier terrain.

I tested the mid-range and mid-priced Overland, which comes standard with four-wheel drive and large 20-inch wheels. It also boasts a slew of niceties, such as quilted upholstery, panoramic sunroof and high-tech digital displays. These include a 10.25-inch infotainment touchscreen and rear-seat entertainment system.

The nine-speaker Alpine stereo, designed specifically for the Grand Cherokee, is pleasing. But I really wanted to hear the boffo 19-speaker McIntosh surround-sound system that Jeep also offers. Sigh, it’s only available on the premium Summit trim level.

MERCEDES GLE-CLASS

$64,000

MPG: 20 city/25 highway

0 to 60 mph: 6.6 seconds

Maximum cargo room: 33.3 cu. ft.

PROS: Lush interior, silky-smooth suspension, speedy

CONS: Some confusing electronics, tight third row, many competitors

IN A NUTSHELL: For a more high-class hauler, there’s the Mercedes GLE-Class. This midsize SUV is similar in size to the Jeep Grand Cherokee. But instead of seating five passengers, the GLE can carry up to seven. Sure, legroom in the optional third row may be tight for taller travelers, but it’s perfect for a cocky cockswain or two.

Six trim levels, ranging from the base-model GLE 350 to two high-performance AMG models. For eco-conscious buyers, the GLE 450e plug-in hybrid arrived earlier this year and can run on battery power alone for almost 60 miles.

My test car was the top-of-the-line AMG 63 S 4Matic, a head-turner in every way. Priced at a whopping $127,000, this GLE looks best in glossy black with the Night Package, which includes tasteful jet-black exterior accents and matte-black wheels. To complete the Darth Vader effect, there’s a deep, menacing exhaust rumble that’s downright threatening.

You expect such a ride to be wicked fast, and it is: 0 to 60 mph in a blistering 3.7 seconds. Yet the carbon ceramic brakes with their devil-red calipers are equally impressive in slowing things down quickly.

Inside, each GLE comes with two large digital displays on the elegantly sculpted dashboard. My favorite feature is the “Hey Mercedes” digital assistant, which responds to voice commands such as opening or closing the sunroof, operating the infotainment system or activating the climate controls.

It’s hard to find sport seats that are more comfortable, especially with the heavenly massage function (though those massage controls could be a bit more user-friendly.) For AMG models, the seats come with red-contrasting stitching and red seatbelts—a nod to the devilish demeanor under the hood.

Considering all the SUVs available in showrooms, few make quite the splash of a GLE.