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Hi- My husband has received a job offer in a place we want…

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Hi- My husband has received a...
Hi-
My husband has received a job offer in a place we want to live on the East coast. We are currently in the Mid West.
He is 62 and we are woefully underfunded for retirement after two bad business decisions and the loss of one of our children seven years ago.
Here, he is enrolled in a pension plan and currently has $88K, but will not be vested for another 3 years.(9/2013) His current contract expires 4/2012. The 403b's are essentially the same in both places. Salary is the same and bonuses are essentially the same. Here, we will have no help with moving back to the East coast.
There, there is no pension, but the company has agreed to give him a $75K loan which will be forgivable at the rate of $25K per year. The contract is guaranteed for 3 years, starting 9/2010 through 9/2013. (We originally thought this is the amount we will need to sell the two properties we currently own and are preparing to put on the market.) There is also a 457b there and they will contribute 2% of the max $245K starting Yr. 2. There is a $10K moving allowance.

If we put the 75K into IRA's or some other retirement vehicle, (or do anything else differently,) will the new position be better or worse than staying here?
Submitted: 8 years ago.Category: Tax
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Answered in 3 hours by:
6/26/2010
Tax Professional: Lev, Tax Advisor replied 8 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,319
Experience: Taxes, Immigration, Labor Relations
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There are so many things to look that it would be impossible to tell which position is better.

Several issues to consider...

Most likely part of $88,000 in pension plan is vested. In additional - your contributions are always vested.

As you are about to sell properties - be prepared that the market is not good for sellers and if you will be under the time pressure - most likely you will sell below market value.

If you have a capital gain on sale of your properties - you may exclude the gain on the sale of your primary residence, but the gain from the sale of another property will be taxable.

Most likely you will be able to deduct moving expenses on your tax return.

A loan of $75,000 that is forgivable - is a fringe benefits and should be included into wages and taxed as such.

The same is true for $10,000 moving allowance - that amount will be reported as wages - you still will be able to deduct your actual moving expenses.

Additional income will likely push you into higher tax bracket (plus state income tax) - and your actual "bonus" will be less than declared amount.

 

You may contribute into IRA account only up to $12000 - for both of you assuming you are 50+.

However - there will be deduction limit based on total income - see details here - http://www.irs.gov/retirement/participant/article/0,,id=188235,00.html - so most likely you will not be able to deduct your contribution.

You may want to compare a cost of living in both places - so even if income would be the same - you may try this calculator - http://www.bestplaces.net/city/

or this - http://cgi.money.cnn.com/tools/costofliving/costofliving.html

 

Let me know if you need any help.

 

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