On 12/27/2024 1:24 PM, R Losey wrote:
I absolutely agree with you that using a dummy account doesn't "feel
right"... when I have situations that I don't fully understand, I run into
that a lot.
I can think of three options:
In asking this question (what to do NOW, taking money out) you leaving
out a very important detail, how did you account for the money when it
went in?
For example, did you include this money as part of income THEN. If so
how? Just "non-taxable income". As "deferred income". How about gains in
the account each year? Think about what an IRA/401k actually is, a
method of DEFERRING income (and income tax) to a point later in life
when presumably you are no longer having current salary income.
If you did NOT include the deferred income (and any employer matching)
as income back then, it is simply income now. BUT -- because we often
want our accounting system to show how well off we are (or to compare
opportunities) we might well have been tracking "deferred" and
"conditional" amounts*. Well in that case the price is more complex
bookkeeping now that money is coming out.
Michael D Novack
* Conditional, because although an employer might make "matching"
contributions or offer "split dollar" whether you get to keep those
amounts depends on CONDITIONS (will you remain with that employer till
"vested", etc). Things like "split dollar" involve decisions WHEN you
leave based on your health at this future date.
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