First rollover IRA, what next... Need investment advises for a newbee

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
loklav
Posts: 16
Joined: Fri Nov 10, 2017 11:39 pm

First rollover IRA, what next... Need investment advises for a newbee

Post by loklav » Fri Nov 10, 2017 11:42 pm

Hi all,

I moved to the US 4 years ago (from France), and I just created my first rollover IRA account last week (transferring my previous employer 401k). I invested using a 3 funds portfollio approach (70/30 FTIPX/FSTVX/FSITX).
So now, I would like to create two additional individual IRA accounts( for my wife and I) to invest 2*5500 for this year, and since potentially we could go back in our country at some point, I was thinking to choose 2 Roth accounts. I would like some advice to decide what funds to select. My plan would be to choose for one of them the funds similar to the ones I picked with Fidelity but for Vanguard (and potentially 80/20 ratio stock/bonds) and for the second one I don't know yet....

Now that I'm going through this forum, I can see that people give usually more information ... So here we go

ER : 70K in a high interest saving account (1.3%)
Rollover IRA: 50K ((70/30 FTIPX/FSTVX/FSITX)
Debt: mortgage 600K 30years 3.75%, I pay +600$ every month
Tax bracket 28%
AGI 280K (last year)
Filing Status: Married Filing Jointly
State of residence:CA
Age : 40 / spouse 40.
Desired asset allocation : 70/30 and 80/20

I have 3 daughters (15, 8, 8)
I also maximize my current employer current 401K
So I was thinking to open 2 additional Roth IRA before the end of year, a 529 (for the eldest one, she potentially could go study in France so I don't know how it would work but this is a different issue...) and also increase my mortgage payment by an additional $400 but may be it's better to keep this money and do something else with it?

I'm kind of confused with all these different options available so thank you for your help and advises!

Loklav
Last edited by loklav on Sun Nov 12, 2017 11:05 am, edited 4 times in total.

loklav
Posts: 16
Joined: Fri Nov 10, 2017 11:39 pm

Re: First rollover IRA, what next... Need investment advises for a newbee

Post by loklav » Sat Nov 11, 2017 11:37 am

Well I'm also reading now that I should not have rollover my 401k to an IRA account now, an do some backdoor Roth IRA before... ?

User avatar
Earl Lemongrab
Posts: 2886
Joined: Tue Jun 10, 2014 1:14 am

Re: First rollover IRA, what next... Need investment advises for a newbee

Post by Earl Lemongrab » Sat Nov 11, 2017 6:20 pm

There's no way to know because you haven't provided enough information. The ability to contribute to Roth IRA depends on your modified adjusted gross income.

The best idea is to update your post with all of this information:

viewtopic.php?f=1&t=6212
This week's fortune cookie: "You will do well to expand your horizons." Ow. Passive-aggressive and vaguely ominous.

loklav
Posts: 16
Joined: Fri Nov 10, 2017 11:39 pm

Re: First rollover IRA, what next... Need investment advises for a newbee

Post by loklav » Sun Nov 12, 2017 11:06 am

Really appreciate your feedback! I added all the asked information to the initial post. It looks like my MAGI is the same than my AGI

User avatar
Earl Lemongrab
Posts: 2886
Joined: Tue Jun 10, 2014 1:14 am

Re: First rollover IRA, what next... Need investment advises for a newbee

Post by Earl Lemongrab » Sun Nov 12, 2017 11:42 am

Your MAGI is too high for direct Roth contributions. Backdoor Roth for your spouse is not a problem, but for you the rollover IRA is included in the conversion tax calculation. Can you roll the rollover IRA into the current 401(K)? If so, is it a decent plan?
This week's fortune cookie: "You will do well to expand your horizons." Ow. Passive-aggressive and vaguely ominous.

loklav
Posts: 16
Joined: Fri Nov 10, 2017 11:39 pm

Re: First rollover IRA, what next... Need investment advises for a newbee

Post by loklav » Sun Nov 12, 2017 12:18 pm

I don't know yet about my new employer 401k. I don't have access to it yet, I just started 2 weeks ago.
But even in this case, legally, can I still do this rollover even if I already did a rollover from my previous employer 401k to my rollover IRA this year? (just want to check that it's not part of the one rollover per year rule...)
Else my only option is to open an IRA for me? If at some point I have an employer that allows me to rollover my current rollover IRA to its 401K, could at this point convert this new IRA in a Roth IRA?

So in all cases, you recommend me to open a Roth IRA for my wife? I was thinking to open an account at Vanguard, just to have access to different mutual funds than the ones I have in my rollover IRA at Fidelity. Also do you know if this backdoor Roth process is easy to do online at Vanguard?

I'm also wondering what I should do with my mortgage and how to save for college:
I'm currently paying an extra $600 with my monthly mortgage payment (and I was thinking to increase to $1000). Should I use this money differently instead of trying to reduce my mortgage timeline? I don't know if investing in a 529 is a good option for me, considering that our daughter will go to college in less than 3 years and we don't know where.... so may be investing in a CD or IBonds or .... would it be a better option? ( I could still you my wife Roth IRA to pay for my daughter's college, right?). I would like something with a better AAR but...

Finally I was thinking to move one part of my EF, in IBonds... I was just reading about IBonds and CDs last night...

I realize that we could have planned more for our retirement, we were just focusing on paying our mortgage, and our saving accounts. We started our 401k late (my wife will open one soon with her new employer). So I'm just trying to figure out what is the right balance to find now.

Thanks for your help!

User avatar
Earl Lemongrab
Posts: 2886
Joined: Tue Jun 10, 2014 1:14 am

Re: First rollover IRA, what next... Need investment advises for a newbee

Post by Earl Lemongrab » Sun Nov 12, 2017 1:28 pm

It is legal to roll pretax amounts from a traditional IRA into a qualified plan. The plan does not have to allow it, or can add restrictions.
This week's fortune cookie: "You will do well to expand your horizons." Ow. Passive-aggressive and vaguely ominous.

loklav
Posts: 16
Joined: Fri Nov 10, 2017 11:39 pm

Re: First rollover IRA, what next... Need investment advises for a newbee

Post by loklav » Sun Nov 12, 2017 5:11 pm

Ok Thanks!

So from 401k (previous employer) to Rollover IRA and from Rollover IRA to 401k(current employer) is not controlled by the one IRA rollover per year rule (https://www.irs.gov/retirement-plans/ir ... -year-rule) ?

And if I open a new traditional IRA with 5500$ to backdoor to a new Roth IRA, in this case I can do it (only once this year). I could potentially put more than 5500$ on this traditional IRA to move more on the Roth IRA?

The thing is that I was almost convinced that having both traditional IRAs and Roth IRAs was necessary since I don't really know in which country I will retire... In this how-to, http://thefinancebuff.com/the-backdoor- ... ow-to.html, the guy seems to imply that a Roth IRA is only the third choice to consider once you already have a 401k and a traditional IRA...

Any thoughts on my over questions?

User avatar
Earl Lemongrab
Posts: 2886
Joined: Tue Jun 10, 2014 1:14 am

Re: First rollover IRA, what next... Need investment advises for a newbee

Post by Earl Lemongrab » Mon Nov 13, 2017 10:33 am

Rollovers to and from qualified plans like 401(k) never come under the one rollover rule.

Direct rollovers never come under the one rollover rule.

Conversions from TIRA to Roth never come under the one rollover rule.

You can convert as much as you want in a TIRA, but you are limited to contributing $5500 ($6500 for age 50+). That limit covers both TIRA and Roth. There's no double-dip.
This week's fortune cookie: "You will do well to expand your horizons." Ow. Passive-aggressive and vaguely ominous.

loklav
Posts: 16
Joined: Fri Nov 10, 2017 11:39 pm

Re: First rollover IRA, what next... Need investment advises for a newbee

Post by loklav » Mon Nov 13, 2017 7:29 pm

Ok, thanks for these info.

Does anybody have some advises concerning the way I could invest more appropriately my savings?


Thanks

Bruno

Post Reply