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Retirement tax questions
@mapaww - remember that loans come with interest that eat up the savings.
Let's assume you find an institution that is going to lend your daughter $70,000 for a student loan for her JUNIOR YEAR of college. Let's further assume the interst rate is 6% in today's environment (that may be quite low - not sure).
She is in a 32% tax bracket today (because of the kiddie tax).
if she lands a job out of college that puts her into the 22% tax bracket (approx. $53k-103k of gross income) and she distributons $70k from the IRA to pay off the loan, that IRA is taxed at 22%, but then you have two years of interest payments at 6% each year, so the 'tax' is 34%! (I added 2 years at 6% each year).
Now if she gets a job that pays less than $53k and the tax bracket is 12%, it begins to make sense to take out the loan while in college....
good luck!