I have touched on this topic in the past. Let's do it again.
I see people looking for answers to protect their wealth.
I think there is essentially no way to avoid some financial loss with the upcoming financial crisis. If there was a way to protect your 401k, everyone would be talking about it and I see no answers floating around.
You have to look at it from a 40,000 foot view though.
The entire world market is over-stimulated by spending and quantitative easing. Inflation is getting worse because the money being thrown into the market by the Fed. This created a falsely elevated stock value that will crumble one day soon.
In order to fix our financial system, we must first get rid of the Fed and then there must be a major market correction.
Look at the DOW history here.
https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart
Notice when our currency was tied to gold, back in the early 60's for instance, the DOW was between 5000 and 8000. Prices of everything was really cheap.
Price of a gallon of gasoline was .30 cents in 1965.
https://www.energy.gov/eere/vehicles/fact-741-august-20-2012-historical-gasoline-prices-1929-2011
Trump's plan is to get rid of the Fed and once again back the dollar by gold. Q told us gold would destroy the Fed.
Now, if you lose 50% of your 401k but at the same time a gallon of gasoline falls from $3.50 a gallon to 30 cents a gallon, how much buying power have you really lost in your 410k?
The answer is none, you may be better off even after losing half your wealth.
Taking us back to the days of the 1960's when one income was enough to support a family is where I see this going. The Fed got us in this situation, getting rid of the Fed will remove us from this situation. There will be a transition period where things get hectic, but it will be for the better.
Back in the 1960's the dollar bill was called a silver certificate. The value of a dollar was linked to the price of a ounce of silver. In 1963 the price of a ounce of silver was $1.29, today it is $23.50.
https://www.silverinstitute.org/silverprice/1960-1965/
So, if the value of the dollar is once again tied to the price on a ounce of silver, how many gallons of gasoline can you buy for a dollar?
23.50 / 3.50 = 6.7 gallons
New currency would need to be distributed, new coinage. Over time, the price of everything you buy in the market place would be depreciated, price correction to our new currency would take place.
For example, in the initial stages, if you are buying a gallon of gasoline with old currency you pay $3.50, if you are using new currency, you pay 30 cents. There may be separate gas pumps at each station. Some set for old currency, other set for new currency. This would go on till all the old currency is pulled from the system.
Also, minimum wage, hourly wages and salaries would need to be adjusted. Someone making $100,000 per year could save enough to retire on in few years.
Homes would be depreciated, so your mortgages and house payments would need to be recalculated. Property taxes recalculated.
How long it takes and how it gets done, I have no idea, I assume it will take time for a full correction. Rumor is, federal income taxes will be eliminated, this will give a cushion for people trying to balance their checkbooks. The best part is, the FED will be dead. No more stealing wealth from the people by charging us interest on fake money created from thin air.
Our National wealth would be reinvested back into the country instead of filling the pockets on the elite bankers.
This is the meaning behind, "The Best is Yet to Come".
Have faith that all the details have been thought out before this correction started taking place. Trump would never allow our country to fail. Get rid of your anxiety, worrying about it will do no good. We are on a ride to better days.
Stay safe my frens!!!
WWG1WGA!!!
The tax bracket comes from the days when if you made over a certain amount, it was all taxed at a higher rate. So in your case all of your income would have been taxed at the higher 24% rate, based on todays rates and using the lower tax rate amounts for single filers, $89,075 would all have been taxed at the rate 2% higher, or $1781.
In your case the 2% increase in rate, assuming it was based on the full 7000 dollars was $140. This is not something the causes people to avoid hitting a higher tax rate, or bracket as you call it. Assuming a 10% penalty ($700, Your choice to withdraw) and the $140, thats $840, that means you overpaid by 3160 dollars, or as I said before, you had something else going on. Your taxes did not increase $4000 due to federal reserve notes to money.
I just went and pulled my taxes out and looked at them.
I guess I was already in the 24% from yearly income.
In 2021 I made $87k, so I was at the 22% rate. I got back $2000 from federal.
Last year I made $108,000, this put me in the 24% bracket.
I didn't change my exemptions, I think I claim 1 on my W4.
The extra 2% on $108,000 was an extra $2160 in taxes.
Getting to the IRA:
There was a 10% penalty on the $7000 = $700
I had to pay 24% on the $7000 because it was invested before tax money came out. It was transferred to a IRA from a former employer 401k many years ago.
$7000 x 24% = $1680
1680 + 700 = 2380
And I lost half of my exemption for my son ($500) because he turned 17 this year.
So it looks like I would have got a return of $380 this year, the IRA cost me $2380 and I had to pay $2000 this year.
So, I went from getting back $2000 to paying $2000 but technically it wasn't all from the IRA, I made more money last year so you were right.
The extra 2% does not get assessed to the whole 108,000. It only gets applied to money earned over $X, not sure the amount due to your filing status. I would have someone look at your return, either your withholding dropped or you overpaid your tax, an amended return corrects any errors. At a minimum a good accountant should be able to review one year over another and spot pretty easily id something is off, shouldn't cost that much, and they may not charge if they dont find anything.
I will contact the tax company I use and ask someone else to review it. The place I use has always done my right or so I thought. I think it was a new person that did my stuff this year. Thanks for looking out for me!! I will have to but you a beer one day!!
No problem, where we go one we go all.
FYI its possible your withholding was reduced, though im not aware that the government did that, and the company follows tables the irs provides.