If you’ve got assets that are tax deferred – it makes sense to consider tax implications. Especially if you’re making large financial moves.
Here’s a real world example. I have an inherited IRA – I’ve looked at pulling the money out to pay down my mortgage. But I’d have to pay income taxes on it. For now – it’s better to take the minimum RMD each year and let the money stay invested in a tax benefited way. If fed income tax rates were to go up for middle income folks to a huge rate (say 40% or such), I’d pull money out now, pay the current (mid 20%) tax rate, and use the money to pay down the house. But it doesn’t make sense given the current tax rate.
I think most Piggs, even the poorer ones, are analytical enough to “do the math” when making large financial moves.
Some things can’t be timed for tax purposes… Wealthy people die when they die, not on a tax schedule – it’s currently a GREAT year for wealthy relatives to die. (Too bad I don’t have any.) 2010 has no estate tax. 100% of the estate is excluded. It was a $3.5M exclusion last year It goes back to a $1M exclusion next year. (Taxes are paid at a pretty stiff rate on the value of the estate above the exclusion.)
I assume most piggs will reallocate, reevaluate if there are significant tax changes.
