Bulking up my retirement

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ClanH
Posts: 1
Joined: Sat Jul 15, 2017 11:08 pm

Bulking up my retirement

Post by ClanH » Sat Jul 15, 2017 11:36 pm

My wife and I are approaching our 40's and make average incomes. I have always maxed out my pension (we have no 401K) but have been told I need to do more. For the past 8 years, we both have both maxed out Roth IRAs with Vanguard in age based mutual funds. I have had other funds tied up in a business, which closed but left me with $300,000. We also have 4 kids that will most likely attend college in the next 6-12 years. I would like to use this money wisely. I would prefer the majority is put towards retirement, but with a maxed out Roth and no flexibility in the pension program, where do I put it? I am hoping for tax savings and a little protection from FAFSA in 6 years. Do I open 429 college savings accounts or plan on pulling that from retirement accounts? I do have a mortgage, but a very low interest rate on a 15 year term which we can handle.

I appreciate any advice you can provide to at least get this money out of my savings account!

miamivice
Posts: 576
Joined: Tue Jun 11, 2013 11:46 am

Re: Bulking up my retirement

Post by miamivice » Sun Jul 16, 2017 6:33 am

One comment regarding college:

Most money that you have is off-limits for college unless you pay penalties. You can withdraw Roth IRA contributions but not earnings. If folks are suggesting that you bulk up your retirement, you probably don't want to pull Roth IRA contributions out of your retirement to pay for college.

Regarding FAFSA, while dumping money into retirement will help you on the initial FAFSA application (since retirement dollars do not count toward parents assets), once you start to pull money out of retirement (Roth IRA contributions) that will count as income, and your FAFSA EFC will climb during Sophomore through Senior years of college.

runner540
Posts: 278
Joined: Sun Feb 26, 2017 5:43 pm

Re: Bulking up my retirement

Post by runner540 » Sun Jul 16, 2017 7:22 am

ClanH, can you share more detail about your overall financial situation? Specific numbers for your income, pension, expenses, etc. will help folks provide better answers. Do you plan to retire before the kids are done with college?

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TomatoTomahto
Posts: 6407
Joined: Mon Apr 11, 2011 1:48 pm

Re: Bulking up my retirement

Post by TomatoTomahto » Sun Jul 16, 2017 7:37 am

Welcome to the forum. If you provide more details, as described in viewtopic.php?f=1&t=6212, it will serve two functions: 1, we will be better able to help you and 2, the process of getting the information together can be helpful in its own right.

ACM4297
Posts: 59
Joined: Mon Mar 27, 2017 8:37 pm

Re: Bulking up my retirement

Post by ACM4297 » Sun Jul 16, 2017 7:57 am

miamivice wrote:
Regarding FAFSA, while dumping money into retirement will help you on the initial FAFSA application (since retirement dollars do not count toward parents assets), once you start to pull money out of retirement (Roth IRA contributions) that will count as income, and your FAFSA EFC will climb during Sophomore through Senior years of college.
Out of curiosity: could he start funneling money into Savings Bonds? You can defer income for 30 years so would it he counted for FAFSA? You have a bonus in that you can cash these in for Education and pay nothing in taxes.

Secondly, would a deferred annuity work? I'm not very informed on annuities but I know the earnings are tax deferred until you withdraw them, so they could be a investment vehicle that won't mess up college aid.

miamivice
Posts: 576
Joined: Tue Jun 11, 2013 11:46 am

Re: Bulking up my retirement

Post by miamivice » Sun Jul 16, 2017 9:43 pm

ACM4297 wrote:
miamivice wrote:
Regarding FAFSA, while dumping money into retirement will help you on the initial FAFSA application (since retirement dollars do not count toward parents assets), once you start to pull money out of retirement (Roth IRA contributions) that will count as income, and your FAFSA EFC will climb during Sophomore through Senior years of college.
Out of curiosity: could he start funneling money into Savings Bonds? You can defer income for 30 years so would it he counted for FAFSA? You have a bonus in that you can cash these in for Education and pay nothing in taxes.

Secondly, would a deferred annuity work? I'm not very informed on annuities but I know the earnings are tax deferred until you withdraw them, so they could be a investment vehicle that won't mess up college aid.
No clue. I am not a FAFSA expert.

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