Search found 26 matches

by hatchinganegg
Thu Sep 20, 2018 7:30 am
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Re: Have We Missed the Boat on Roth Conversions?

I have a similar situation to you only reversed. I want to retire at 50 while hubby will probably want to continue working. I think you want to be able to do the 5 year Roth conversion ladder so that you can early retire and pull money out without the tax consequences. Unfortunately this only reall...
by hatchinganegg
Thu Sep 20, 2018 7:16 am
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Re: Terminology Clarification

Since it appears you and your wife have never made a non-deductible contribution to an IRA, the pro rata rule will not apply to you. Either of you can convert as much of your traditional IRAs as you like and pay taxes on the converted amount. Note that this does not have anything to do with what pe...
by hatchinganegg
Thu Sep 20, 2018 6:32 am
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Re: Have We Missed the Boat on Roth Conversions?

Just make sure, that if you are going to be contributing after-tax money to your 401(k), ie the Mega Backdoor, that you convert that money out to your Roth IRA or at a minimum, to the Roth 401(k) inside your plan. Before doing so, you'll owe taxes on any gains those after tax contributions earn. Af...
by hatchinganegg
Wed Sep 19, 2018 8:44 am
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Re: Have We Missed the Boat on Roth Conversions?

If I am doing the mega do I have to stay in the plan? If I don’t like that plan then maybe the straight up conversion would give me more flexibility. There are a couple of things that might be considered a Mega backdoor. One is an "in-plan Roth Rollover" where the money rolls from the after tax-acc...
by hatchinganegg
Tue Sep 18, 2018 11:51 pm
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Re: Have We Missed the Boat on Roth Conversions?

Another option could see you saving on taxes if you wait to retire until age 55. The IRS 401k withdrawal rules contain an exception to the 10% early withdrawal penalty before age 59-1/2 if you leave employment for any reason after age 55. The only money that would qualify is money in the 401(k) pla...
by hatchinganegg
Tue Sep 18, 2018 11:47 pm
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Re: Have We Missed the Boat on Roth Conversions?

If you do the mega back door for say $15k, you have to come up with $15k in "new" money (probably from income) in order to contribute that $15k. Then you also need a little money to pay tax on the earnings your $15k made before being rolled out to Roth IRA. But you could convert $15k from your IRA ...
by hatchinganegg
Tue Sep 18, 2018 11:34 pm
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Re: Have We Missed the Boat on Roth Conversions?

teen persuasion wrote:
Mon Sep 17, 2018 7:12 am
Roth IRAs have no RMDs, but Roth 401k accounts DO have RMDs.

Traditional IRAs and traditional 401k accounts both have RMDs.

You can avoid Roth 401k RMDs by rolling the account to a Roth IRA after you leave the employer.
Thank you for this summary!
by hatchinganegg
Sun Sep 16, 2018 4:53 pm
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Re: Have We Missed the Boat on Roth Conversions?

Here are two links that discuss withdrawal rules from Roth IRA. Each author is someone who posts here on occasion. https://obliviousinvestor.com/roth-ira-withdrawal-rules/ https://thefinancebuff.com/rollover-after-tax-401k-403b-access-before-59-1-2.html Thank You This thread has convinced me not to...
by hatchinganegg
Sun Sep 16, 2018 1:23 am
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Re: Have We Missed the Boat on Roth Conversions?

The $10k does not have a clock but you cannot take that money without taking the $500 first. As you can see, a 10% penalty on that $500 is pretty insignificant if you really need the money. And so on. So if you do this mega-back door some each year for 5 - 7 years, you should have what you need to ...
by hatchinganegg
Sat Sep 15, 2018 11:13 am
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Re: Have We Missed the Boat on Roth Conversions?

Wow, you are doing great! I just want to clarify that the Backdoor Roth contribution will trigger tax consequences in your situation. The balance of all of your traditional/SEP/SIMPLE IRAs (basically non-Roth IRAs) are factored into the tax equation. A non-deductible contribution to a traditional I...
by hatchinganegg
Sat Sep 15, 2018 2:06 am
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Re: Have We Missed the Boat on Roth Conversions?

Is the Backdoor Roth a smaller version of a mega with added tax pitfalls? It's best to think of them as completely different things, despite the name similarity - because they are completely different things. One is a non-deductible tIRA contribution followed by a traditional IRA->Roth IRA conversi...
by hatchinganegg
Sat Sep 15, 2018 1:56 am
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Re: Have We Missed the Boat on Roth Conversions?

Another option could see you saving on taxes if you wait to retire until age 55. The IRS 401k withdrawal rules contain an exception to the 10% early withdrawal penalty before age 59-1/2 if you leave employment for any reason after age 55. The only money that would qualify is money in the 401(k) pla...
by hatchinganegg
Sat Sep 15, 2018 1:52 am
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Re: Have We Missed the Boat on Roth Conversions?

Hi “Slow n Steady” Let me attempt to answer your questions below. To give you any real advice: 1. What is your current annual spend (not income)? We spend about 90K annually which includes extra house payments. 2. How much are you and your wife saving annually for retirement? We max out our 401K, 37...
by hatchinganegg
Sat Sep 15, 2018 12:12 am
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Re: Have We Missed the Boat on Roth Conversions?

Gotcha. When I was reading about these initially I thought withdrawal was referring to the time when you want to spend it, not really the rollover/conversion part. Now that makes sense. I hope that is what you think now, because withdrawal is referring to the time when you want to spend it Earlier ...
by hatchinganegg
Fri Sep 14, 2018 11:47 pm
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Re: Have We Missed the Boat on Roth Conversions?

Gotcha. When I was reading about these initially I thought withdrawal was referring to the time when you want to spend it, not really the rollover/conversion part. Now that makes sense. I hope that is what you think now, because withdrawal is referring to the time when you want to spend it Earlier ...
by hatchinganegg
Fri Sep 14, 2018 11:32 pm
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Re: Have We Missed the Boat on Roth Conversions?

hatching...it appears you want to have $100k in spendable money and you want to accumulate it in about 7 years. There are several ways to do this, but I am not sure that Roth conversions at 24% is your best route. It could be done however. After deep diving I’m beginning to agree with your statemen...
by hatchinganegg
Fri Sep 14, 2018 11:12 pm
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Re: Have We Missed the Boat on Roth Conversions?

To clarify, there are two different processes here: Roth conversions and Backdoor Roth contributions. A conversion from a traditional IRA to a Roth IRA is 100% taxable, assuming no non-deductible contributions in the traditional IRA. If you convert a total of $100,000 you will owe taxes on the enti...
by hatchinganegg
Fri Sep 14, 2018 11:07 pm
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Re: Have We Missed the Boat on Roth Conversions?

We need to clarify the meaning of "the conversion itself." If you are talking about the existing $709K you have in traditional accounts and converting that to Roth (or simply withdrawing after age 59.5), "pro-Rata and aggregation" is irrelevant. You simply pay tax at your marginal rate on whatever ...
by hatchinganegg
Thu Sep 13, 2018 11:51 pm
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Re: Have We Missed the Boat on Roth Conversions?

I've read your post a few times and I'm not sure I understand what the question is. Whatever the question is, we need to know your current tax bracket (do you need help with that?) and we need to know who those various accounts belong to - his vs hers. I'll read it some more and see if I can figure...
by hatchinganegg
Thu Sep 13, 2018 11:27 pm
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Re: Have We Missed the Boat on Roth Conversions?

It’s very possible I’m missing something huge here. That seems the case. But don't worry - everyone here didn't know these details until they did. Thanks for this, I have a lot to learn and am open to more education. Let’s say I wanted to have 100k in Roth IRA that I could withdraw from penalty fre...
by hatchinganegg
Thu Sep 13, 2018 8:29 pm
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Re: Have We Missed the Boat on Roth Conversions?

Then you have nothing that needs to be pro-rated if you do Roth conversions. But you should not be considering Roth conversions in your current tax bracket in most cases. I think you may be confusing Roth conversions with the back door method of contributing to Roth IRA. They are not the same thing...
by hatchinganegg
Thu Sep 13, 2018 8:17 pm
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Re: Have We Missed the Boat on Roth Conversions?

I think you may be confusing Roth conversions with the back door method of contributing to Roth IRA. They are not the same thing although a Roth conversion is involved in each process. Yeah, I think they (OP) mean backdoor Roth - so the $5700 is a backdoor Roth conversion that was carried out while...
by hatchinganegg
Thu Sep 13, 2018 7:05 pm
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Re: Have We Missed the Boat on Roth Conversions?

retiredjg wrote:
Thu Sep 13, 2018 6:01 pm
Do you or your spouse have any non-deductible contributions in any IRA?
I have a small Roth IRA. Otherwise no non-deductible contributions in the IRA’s.
by hatchinganegg
Thu Sep 13, 2018 5:54 pm
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Re: Have We Missed the Boat on Roth Conversions?

I only just learned about the IRA Aggregation Rule and Pro-rata taxation from a friend that frequents this forum. Do you have anything to pro-rate? In other words, do you have any non-deductible contributions in your IRAs? I’m trying to plan for early retirement and anticipating that I would eventu...
by hatchinganegg
Thu Sep 13, 2018 3:29 pm
Forum: Investing - Help with Personal Investments
Topic: Have We Missed the Boat on Roth Conversions?
Replies: 48
Views: 5632

Have We Missed the Boat on Roth Conversions?

Thanks in advance for any comments/advice related to my current situation. I have a goal to retire from my corporate job after the house is completely paid off, target age 50, take a year or two off, and then work at something that may pay much less than what I earn now. Wife still wants to work for...
by hatchinganegg
Thu Sep 13, 2018 12:19 am
Forum: Investing - Help with Personal Investments
Topic: Do you rollover all of your previous 401ks?
Replies: 33
Views: 2285

Re: Do you rollover all of your previous 401ks?

Only if you do not expect to need to utilize Backdoor Roth IRA contributions. I would roll the old 401k into the new one for the sake of simplicity. I rolled all of my former 401K’s to IRA and only now realize I could have benefitted from ROTH conversions. When you roll over your money from an empl...