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Starvation or suicide should come before ever even thinking about touching your retirement. It is an absolute NO_NO..! There will never be a season good enough to take money out of that account, NEVER to be considered for ANY reason, PERIOD... YOu can NEVER make that money up again, and you will be kicking yourself when you retire.
I was in my forties before I was able to get into a 401k, because years ago there were no such accounts, and when they first appeared, only management were able to get in. Finally it was opened up to all employees.
I always maxed out my account and when I reached a certain age, you can double the max for five years. I suffered and sacrificed for the five years and doubled the max. Now retired I can see all of my sacrifice was well worth it.
DO NOT TOUCH YOU RETIREMENT ACCOUNT FOR ANY REASON...!!!!!
If you are working and have a 401K plan that has an "after-tax" bucket in there and you are already maxing out your pre-tax, then doing in-service conversions from after-tax 401K to 401K roth is a great strategy to take advantage of if your 401K plan allows it. (IMO) This is a ninja roth investment move, one not to miss.
In addition, in early retirement, especially if and when taxable income is well-constrained, doing conversions from IRA to Roth, staying within the low tax bracket rate, is smart. You could easily be in a tax bracket of 12% or less *if* you play your cards right, and if you are in a low tax bracket, then converting to roth each year that you can, is a no-brainer. I consider this another ninja roth move to take advantage of if you can.
Starvation or suicide should come before ever even thinking about touching your retirement. It is an absolute NO_NO..! There will never be a season good enough to take money out of that account, NEVER to be considered for ANY reason, PERIOD... YOu can NEVER make that money up again, and you will be kicking yourself when you retire.
I was in my forties before I was able to get into a 401k, because years ago there were no such accounts, and when they first appeared, only management were able to get in. Finally it was opened up to all employees.
I always maxed out my account and when I reached a certain age, you can double the max for five years. I suffered and sacrificed for the five years and doubled the max. Now retired I can see all of my sacrifice was well worth it.
DO NOT TOUCH YOU RETIREMENT ACCOUNT FOR ANY REASON...!!!!!
Single and 32% tax bracket is my fear. In fact, I ran multiple scenarios and if I’m not careful, I could be paying twice the amount then I’m paying now. Individual situation is different. Not just RMDs, SS at 70, but a lot of my income will be taxable. Know your specific situation when you do Roth conversions.
If you are working and have a 401K plan that has an "after-tax" bucket in there and you are already maxing out your pre-tax, then doing in-service conversions from after-tax 401K to 401K roth is a great strategy to take advantage of if your 401K plan allows it. (IMO) This is a ninja roth investment move, one not to miss.
In addition, in early retirement, especially if and when taxable income is well-constrained, doing conversions from IRA to Roth, staying within the low tax bracket rate, is smart. You could easily be in a tax bracket of 12% or less *if* you play your cards right, and if you are in a low tax bracket, then converting to roth each year that you can, is a no-brainer. I consider this another ninja roth move to take advantage of if you can.
Ah the mega backdoor roth. whats crazy is how much you can do (like 30 grand or so). Add that, on top of 19 grand or so in the regular 401k, plus a few more company match...
This is why I only contribute up to the match on my 401k because you cant touch it until you are extremely old without massive penalty. Most of my money is in an individual investment account as I feel lay offs are far more of a risk than retirement.
I am part of the FI movement and save almost 70% of my income so that I can convert it from growth to income at any time and live off it without having to work an undesirable job to meet basic bills.
I have a friend that dumped tons of money into retirement accounts and is now facing a potential lay off, he cant touch that money without penalty. I am sure he has a substantial enough in there that he is not going to be facing down homelessness to avoid working a soul sucking mcjob that robs you of your dignity and sanity but it still kind of sucks.
bad planning is bad planning .. not having a good emergency fund is poor planning .
on the other hand the price of admission to a roth is the same as to a taxable brokerage account . the roth is never taxed and the taxable account is forever taxed so not utilizing tax advantaged accounts to the max is also poor panning
If you are working and have a 401K plan that has an "after-tax" bucket in there and you are already maxing out your pre-tax, then doing in-service conversions from after-tax 401K to 401K roth is a great strategy to take advantage of if your 401K plan allows it. (IMO) This is a ninja roth investment move, one not to miss.
In addition, in early retirement, especially if and when taxable income is well-constrained, doing conversions from IRA to Roth, staying within the low tax bracket rate, is smart. You could easily be in a tax bracket of 12% or less *if* you play your cards right, and if you are in a low tax bracket, then converting to roth each year that you can, is a no-brainer. I consider this another ninja roth move to take advantage of if you can.
I’m getting ready. February is my big month to stuff as much as I can in my after tax bucket and immediately roll it to my Roth as well as completing my backdoor Roth as well. Looks like I will only be able to get 28k into the after tax bucket
Ah the mega backdoor roth. whats crazy is how much you can do (like 30 grand or so). Add that, on top of 19 grand or so in the regular 401k, plus a few more company match...
Yes indeed!
In addition, some people erroneously think that doing IRA to Roth conversions in early retirement is a bad or useless move. They envision high tax brackets without doing any investigation. These are folks who don't understand the concept of *constraining taxable income* and aggressively doing so.
Obviously it's not something everyone can do, but by planning ahead it is possible to have enough runway and after-tax monies to live on to allow the retiree in those crucial early years to be in a low tax bracket, stay in a low tax bracket, and do some conversions to roth while being in a low tax bracket. If this can be achieved while staying in a 12% or less fed tax rate, then IMO it would be stupid not to take advantage of the conversion opportunity.
These early retirement conversions from IRA to Roth would not be 'mega' backdoor roth conversions since the primary goal is to always stay within the defined low tax bracket and that would limit the amount to be converted each year, but some conversions are better than no conversions.
Again, I'm not suggesting this is something every early retiree can do, but it is possible for many folks to do.
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