Backdoor Roth IRA
Backdoor Roth IRA
My wife and I are in the highest tax bracket and anticipate being in a lower bracket at retirement.
I'm thinking about rolling over my TIRA into my 401k and start making backdoor contributions into an existing Roth IRA.
The offerings in my 401k are pretty good with expense ratios ranging from 0.17-0.86.
Is it worth it to do this rollover in order to do the back door Roth?
Thanks
I'm thinking about rolling over my TIRA into my 401k and start making backdoor contributions into an existing Roth IRA.
The offerings in my 401k are pretty good with expense ratios ranging from 0.17-0.86.
Is it worth it to do this rollover in order to do the back door Roth?
Thanks
Re: Backdoor Roth IRA
Yes, especially if you choose the options with expense ratios closer to 0.17% than 0.86%.Rayd8tr wrote:Is it worth it to do this rollover in order to do the back door Roth?
Re: Backdoor Roth IRA
Thanks...the only Vanguard product I have available is the Vanguard Institutional Index fund. I also have the Fidelity Contrafund available.
I'm scratching my head why my 401k plan managers are recommending 20% of the asset allocation into the Harbor International Instiutional Fund.
The other offerings available to me are as follows:
American Funds Balanced R6
Blackrock Equity Dividend
Pimco total return instl
Morley financial stable value
Oppenheimer developing markets I
Eagle small-cap growth r6
Mass Mutual mid-cap growth equity
Diamond Hill small cap Y
Harbor Intl institutional fund
T. Rowe Price mid-cap value
T. Rowe Price real estate
Fidelity Contrafund
Vanguard Institutional Index Fund
I'm nowhere near as savy an investor as the majority on this forum.
I do have model portfolios suggested by the brokerages that manage my employer's 401k. Nonetheless, I'm curious as to what y'all think.
Thank you
I'm scratching my head why my 401k plan managers are recommending 20% of the asset allocation into the Harbor International Instiutional Fund.
The other offerings available to me are as follows:
American Funds Balanced R6
Blackrock Equity Dividend
Pimco total return instl
Morley financial stable value
Oppenheimer developing markets I
Eagle small-cap growth r6
Mass Mutual mid-cap growth equity
Diamond Hill small cap Y
Harbor Intl institutional fund
T. Rowe Price mid-cap value
T. Rowe Price real estate
Fidelity Contrafund
Vanguard Institutional Index Fund
I'm nowhere near as savy an investor as the majority on this forum.
I do have model portfolios suggested by the brokerages that manage my employer's 401k. Nonetheless, I'm curious as to what y'all think.
Thank you
Re: Backdoor Roth IRA
Rayd8tr wrote: ↑Sat Aug 12, 2017 11:03 pm Thanks...the only Vanguard product I have available is the Vanguard Institutional Index fund. I also have the Fidelity Contrafund available.
I'm scratching my head why my 401k plan managers are recommending 20% of the asset allocation into the Harbor International Instiutional Fund.
The other offerings available to me are as follows:
American Funds Balanced R6
Blackrock Equity Dividend
Pimco total return instl
Morley financial stable value
Oppenheimer developing markets I
Eagle small-cap growth r6
Mass Mutual mid-cap growth equity
Diamond Hill small cap Y
Harbor Intl institutional fund
T. Rowe Price mid-cap value
T. Rowe Price real estate
Fidelity Contrafund
Vanguard Institutional Index Fund
I'm nowhere near as savy an investor as the majority on this forum.
I do have model portfolios suggested by the brokerages that manage my employer's 401k. Nonetheless, I'm curious as to what y'all think.
Thank you
American Funds Balanced R6 (0.29%)
Blackrock Equity Dividend (0.72%)
Pimco total return Instl (0.47%)
Morley financial stable value (0.25%)
Oppenheimer developing markets I (0.88%)
Eagle small-cap growth r6 (0.68%)
Mass Mutual mid-cap growth equity (0.73%)
Diamond Hill small cap Y (0.90%)
Harbor Intl institutional fund (0.80%)
T. Rowe Price mid-cap value (0.80%)
T. Rowe Price real estate (0.74%)
Fidelity Contrafund (0.68%)
Vanguard Institutional Index Fund (0.04%)
The outlier of course is the VINIX with an ER of 0.04%!
I am seriously thinking about either putting my entire 401k into VINIX or doing an independently directed account option I have and choose VIFIX and put it all in that instead.
Re: Backdoor Roth IRA
I'm guessing VIFIX is a typo, but more to the point: your overall asset allocation target deserves some consideration when weighing your 401k choices.
VINIX is likely an excellent choice for that asset allocation; American Funds Balanced R6 (if the 0.29% is available in your 401k) isn't too bad if you want 57% stock/ 35% bond/ 8% cash.
Re: Backdoor Roth IRA
Yes VFIFX (target date retirement fund 2050). Thanks for the clarification.FiveK wrote: ↑Sun Aug 13, 2017 8:30 pmI'm guessing VIFIX is a typo, but more to the point: your overall asset allocation target deserves some consideration when weighing your 401k choices.
VINIX is likely an excellent choice for that asset allocation; American Funds Balanced R6 (if the 0.29% is available in your 401k) isn't too bad if you want 57% stock/ 35% bond/ 8% cash.
Thanks for your input. I was provided some model portfolios based upon risk tolerance. The 10 year historical rate of return of the aggressive, moderately aggressive, moderate, moderately conservative and conservative were: 6.7%, 6.5%, 6.3%, 5.9% and 5.4% respectively.
I'm contemplating an independently directed account option with my 401k and putting 100% into either VFIFX or Life Strategy Growth Fund.
I consider myself a novice and appreciate any input you guys have.
Thanks
Re: Backdoor Roth IRA
I think the institutional index fund is about the best fund you can get. I'd move my IRA into the 401k for that alone. The backdoor Roth is just a bonus.
Re: Backdoor Roth IRA
Those are fine choices even for someone well past novice stage, and are very reasonable for you.
When your balance grows and if you want to be more hands-on in, say, 10 years or so, then for the slightly lower cost you might want to go with individual funds instead of a "fund of funds". Or not.
Re: Backdoor Roth IRA
Thanks for your input. The historical returns have BEN good and the expense ratio cannot be beat. Is it advisable to invest in an index fund in a retirement account?
Re: Backdoor Roth IRA
Thank you.FiveK wrote: ↑Mon Aug 14, 2017 7:39 pmThose are fine choices even for someone well past novice stage, and are very reasonable for you.
When your balance grows and if you want to be more hands-on in, say, 10 years or so, then for the slightly lower cost you might want to go with individual funds instead of a "fund of funds". Or not.
My wife and I are also trying to figure out the best option for a taxable account after maxing out 401ks and back door Roth IRAs. We are trying to decide between the automation, daily rebalancing and tax lost harvesting benefits of Betterment vs the lower overall cost and investment options of Vanguard.
It seems the overall expense ratios of Vanguard and the recommended portfolio of Betterment are comparable. Betterment claims the TLH benefit will potentially pay for their management fee of 0.25%.
After extensive searching on this forum it's obvious there is a bias for Vanguard for good reason. Almost every single financial and lay person I've spoken to has recommended them.
Both offer financial planners for advise. Vanguard charges 0.3% when your account exceeds 500k and Betterment for 0.4% when your account exceeds 100k.
In the end, Betterment may be a good option for novices like myself who don't want to or don't have the confidence yet to more directly manage their account.
Vanguard does not rebalancing automatically or daily but on a quarterly or annual basis as I've been told. They also offer TLH on a client by client basis.
My sense is you can't go wrong either way.
Re: Backdoor Roth IRA
If it matches your investment plan, then yes. All of my retirement accounts have some time of Institutional index, Total market or S&P type fund. Lowest expense ratio and long term horizon.