How do you calculate Roth conversions to reduce taxes when you reach required minimum distribution age? What are the rules for RMDs from a Roth 401(k)? How does the 5 year Roth clock factor into a decision to leave money in an old Roth 401(k) or roll it to a new Roth IRA? Do reinvested dividends count as Roth contributions? Do capital gains count towards the capital gains income bracket? Plus, IRA contributions for minors and the unemployed. Finally, how would Joe, Big Al, and Andi spend lottery winnings?
You’ve had enough of the 9 to 5 and are ready to punch early. Are you financially prepared for a long and early retirement? Joe and Big Al provide a spitball analysis. And of course, the ever-popular Roth IRA conversions: how much to convert to Roth, when and how to pay the tax on a Roth conversion, and why not pay Roth conversion taxes out of the retirement account you’re converting from?
Joe and Big Al answer several versions of what is probably the most common question we get here on YMYW: should we convert money from tax-deferred retirement accounts to Roth, with tax-free growth on our investments for life? Should we do Roth conversions before we get married? Should we do a 403(b) to Roth conversion? When and how much should we convert to Roth if we want to keep our ACA subsidy? Should we do Roth conversions with more aggressive funds first? If we use our cash to pay the tax on Roth conversions, will we run out of money for our early retirement? And to cap it off, something completely different: can you sell without selling your house? What do the fellas think of Ric Edelman’s answer to the question, “should you pay off your mortgage?”
Is it better to pay tax on $5 million than on $1 million, or is that crazy talk? Also, an asset location strategy to lower RMDs and taxes but still maintain portfolio growth, and an argument against Roth IRAs. Is it a valid one? Plus, what counts as contributions if you withdraw from your Roth IRA after 5 years? Why not pay the tax on a Roth conversion out of your IRA? Roth conversions vs. the medical insurance ACA subsidy, and what? Joe, arrogant?!
Which states are best for retirement taxes? When moving to a state with a lower cost of living, is it wise to take on mortgage debt to invest in the market? Does it make a difference if you do a Roth conversion before or after moving to another state? Plus, is it better to do Roth conversions with ETFs or mutual funds? Is zero percent long-term capital gains “a hoax”? Also, ABLE accounts for those with disabilities, and healthcare costs vs. taxes as they relate to medical debt, health savings accounts (HSA), and high deductible health plans (HDHP).
I’m getting married this year. My fiance wants to convert a large portion of her traditional IRA to a Roth before we get married. Will we be taxed at her lower income rate or at mine? – Tom, Scripps Ranch Watch the full episode, Bridging the Retirement Gap at Any Age Make sure to subscribe […]
Do Roth IRA conversions increase Medicare premiums? How can you convert to Roth and stay below the IRMAA threshold (that is, Medicare’s Income-Related Monthly Adjustment Amount)? Also, a Roth conversion strategy to account for RMDs, those 5-year rules for withdrawing from your Roth depending on whether you’re over or under age 59 and a half, and “how much should I have in a Roth to be in a low tax bracket in retirement?”
Maxing out Roth IRA, 457, and HSA – check. Pension – check. What else should you be doing to prepare for a successful retirement? (And do 40 chickens play a part?!) How do pension and Social Security fit into your equity and fixed income portfolio mix? Should you be more aggressive with Roth conversions? When planning for early retirement and considering inflation, is a 5% equities growth rate a good rule of thumb? Will a Spousal Lifetime Access Trust (SLAT) protect assets from a tax time bomb? Plus, an overview of the SECURE Act 2.0.
Learn how to rack up tax-free Roth retirement income: Roth IRA vs. Roth 401(k), paying the tax on a Roth conversion, how to avoid violating the 60-day rollover rule on a mega backdoor Roth, and Roth IRA contributions when receiving restricted stock units (RSU) in retirement. Plus, moving money from solo 401(k) to IRA before age 59.5, suggestions for a CFP® to be, and matching your umbrella insurance policy to your net worth.
Spitballing a real estate strategy: sell investment rental properties to buy a home, use restricted stock units (RSU), do a 1031 exchange, or some other idea? Plus, is it worth it to hire a financial advisor? Is it a good idea to do Roth IRA conversions to the top of your tax bracket each year? How can you move non-deductible IRA money to Roth IRA without paying taxes again? And a cautionary tale about Roth conversions and stimulus payments.
Recharacterization of excess Roth IRA contributions, converting post-tax contributions to Roth 401(k), and the pro-rata rule. Plus, target-date fund ladders? Also, investing 529 plan money, section 199A dividends from real estate investment trusts (REITs), and how Matt Stafford should save for retirement with his new $34M LA Rams contract (just in case you’re expecting a football player’s salary anytime soon.)