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When you reach 71.5 and are required to withdraw from your 401K am I correct that you cannot reinvest in a ROTH at that age?
The age when RMDs kick in is 70.5.
You can convert all or some of your tax-deferred into a Roth IRA at any age. The amount converted is not a distribution, so does not count as part of your RMD.
You cannot make any IRA contribution if you have no earned income.
You can convert all or some of your tax-deferred into a Roth IRA at any age. The amount converted is not a distribution, so does not count as part of your RMD.
You cannot make any IRA contribution if you have no earned income.
I believe you have to take the RMD first, before converting any additional IRA/401K to a ROTH.
The reason I picked Fidelity too is because I had no problems transferring money in and out of my personal account. Only took a day.
My co-worker mentioned she had an easy time putting/investing with Vanguard, but when it was time to take out her money, it was a nightmare, lol. I don't know what she did or did not do correct, but that swayed my decision.
My experience has been exactly the opposite. When I need money out of Vanguard, I either transfer it electronically to my bank account or I make a call to initiate a wire transfer. The money generally moves the next day.
Fidelity was a real headache. After the company I was working for changed ownership, they moved out 401(k) program from a low cost provider (Vanguard) with an average expense ratio of 30 basis points to a high cost Fidelity one with an expense ratio of 85 basis points. As soon as I retired, I made an effort to roll over my 401(k) from Fidelity to E*Trade. In general, that SHOULD take about ten minutes. I was on the phone for 20 minutes from the first representative that I talked to telling me that I should not move the money. Then, I was transferred to the "account retention" department to another representative with a strong Russian accent and the hard sell continued.
At that point, I turned my speaker phone on to allow my wife to listen. After twenty more minutes of a hard sell, I asked the guy if we were on a recorded line. When he said yes, I asked him if he minded if I would record our conversation as I have recording equipment on my phone. Immediately, he said, "No, you cannot record this." Then I said, "if you are recording, I am recording." I laid into for about five minutes that he had no business telling me where I could invest my money and that hid tirade against E*Trade and Vanguard were grossly inaccurate. I told him that if he did not have a check to me within a week by FedEx overnight, that I would contact the regulatory authorities. I ended the call with "do you have all that recorded?"
Two days later, I had the check in my hands.
I was on the 401(k) committee at the employer. I know the rules. What is going to happen to teh next retiree who may have no experience with the employers.
I need some advice from retires, thanks in advance!
I just helped my Dad roll over about $600,000 to Fidelity.
What should he do with his ira? What is the most he can withdraw to stay in the 15% tax bracket? Is there a strategic way to withdraw money so my parents won't get hit with social security taxes? What are you invested in? Medicaid planning? Annuities? Convert to Roth ira slowly? Slowly cash out while staying in the 15% tax bracket and keep cash?
Their monthly expense is $5000.
Extra information, not sure if it's important:
Dad is 62 (health not to great, smoker, drinker, painter type career so lots of chemicals, etc.)
Mom is 60 (healthy!)
Dad will be collecting ss in August 2015 ($1700 per month)
Mom will be collecting ss when she turns 62, on her own ($1350 per month)
Rental income of about $20,000 a year, but parents do not make any money/profit from it due to maintenance fees, property taxes, etc.
Good that you are looking at options. After you do your research I think you need to find a financial planner to help you develop a plan. Note I did not say to invest the money for you but to map out a retirement plan.
Before you look for an advisor go to the large on line stock brokers and mutual funds and start reading about retirement savings. Use the calculators. I think I would work on your own retirement plan as that will be easier than your fathers. Once you have a good idea about planning start on his.
Also look at the SWR (safe withdrawal rate). The general theory is you can spend 4% of your investments. There is lots of research showing that you can spend more or less. For your own planning use 4%. For your father you will need to refine the numbers to meet his actual needs. The reason to read about the SWR is to educate your self on planning and items that need to be considered.
Since the real estate is breakeven get rid of it and invest the proceeds.
The reason I picked Fidelity too is because I had no problems transferring money in and out of my personal account. Only took a day.
My co-worker mentioned she had an easy time putting/investing with Vanguard, but when it was time to take out her money, it was a nightmare, lol. I don't know what she did or did not do correct, but that swayed my decision.
I have also had a very easy time withdrawing money from my Vanguard accounts. I'm not retired yet, so have only withdrawn from taxable accounts. I withdraw the same way I contribute, by logging on and clicking a button. The money shows up in my checking account within a day or two.
depends what you buy . fidelity and vanguard have comparable fees on their index funds and you can buy etf versions from both at the same expense level . .
i have accounts at both and overwhelmingly prefer fidelity . ended up giving fidelity 90% and vanguard only 10% of my investment dollars .
I also have both Vanguard and Fidelity. I prefer the Fidelity web site presentation over the Vanguard web site presentation. The Vanguard account fees are higher than Fidelity, depending on your balance level. If you have less than $50K. The Vanguard trades are $20 after your first 25 $7 trades, much higher than Fidelity. If your Vanguard balance is greater than $50K and less than $500K, then the Vanguard trades are $7, Fidelity is $7.95 a trade. When your Vanguard balances is over $500K, the trades drop to $2, I believe that the Fidelity trade fee is still $7.95, regardless of your balance.
Vanguard is a co-op and Fidelity is a for profit company, as pointed out my this Marketwatch article. That may be the reason that Vanguard has lower fees (which you have a larger balance).
fidelity vs vanguard...whatever. i use vanguard and i like and respect john bogle a lot but you seem to be comfortable with fidelity so i would just leave it there.
if their after tax income that they want/need is $5k/month that is $60k/year. to stay at the 15% tax bracket they need to stay under $74,900 so that's fine.
as for how to get $60k/year...this is the hard part.
$600k at a 4% draw is only $24k. Many think that a 4% withdrawal rate is high these days as well. Since they are in retirement, I would recommend an asset allocation of roughly 75% bond / 25% equity funds.
Your dad's SS will be around $15k after taxes. He should start collecting at age 62 since his health isn't great.
That's still only $40k/year.
My first priority would be to try to lower their expenses so that they can live off of $40k/year.
Your mom is in good health so it will be beneficial for her to postpone receiving SS until she is 70 (or 66 at worst but don't collect at 62).
Selling the condo would be a good move but it sounds like there are other reasons why they want to keep it.
There's no good reason to keep the condo that has been mentioned yet, verses owning an asset that produces no income. It's a seller's market in many areas now. The real estate market may not be very good a few years from now.
I prefer Vanguard over Fidelity because Vanguard has $2 trades on accounts over $500K. Most of our retirement money is stuck in mutual funds outside Vanguard. When we retire, we'll be able to move the money into Vanguard, and get the low cost $2 trades. The Fidelity ETFs aren't free unless you hold for at least 30 days. I don't know if Vanguard has that 30 day hold restrictions on free ETFS. I trade most of my ETFS in less than 30 days.
I think the 4% rule changes if you are fortunate enough to have pensions. For example, we could live off our pensions without having to withdraw much from our retirement savings. The pensions also give us the freedom to invest more aggressively. This is one of the reasons to not take a company pension buyout with a one time payment. Usually those buyouts are a bad deal for the employee and a good deal for the employer. That's why the pension buyouts are offered by companies. Most employees take the pension buyouts. This is a good position that we are in now. It didn't happen by accident. We invested first in ourselves, getting an education in a high rate of return career. We could then make a high income and live well below our means. Most people could do the same thing if they plan and live their lives in the long term. If you could start saving in your 20s, instead of by age 40, you'd be in much better financial shape. We started most of the retirement savings after age 40. That was a mistake.
But the OP is not in good enough financial shape to live the kind of retirement they want. So either they have to give up their dream to retire early, and go back to work longer. Or end their retirement and go back to work. Or, lower their retirement standard of living by significantly lowering their living expenses.
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