Maxed my 401k for the year

[Like2Plan]

Thank you for sharing this link.

I want to comment on this: I did not realize that the entire amount I paid taxes on when I convert from traditional to a ROTH could be considered "contributions" and withdrawn completely penalty and tax free. I have only one traditional 401K and everything is ROTH. With the ROTH, you'd pay taxes on growth if you withdrew it before age 59-and-a-1/2 plus a 10% prepayment penalty, so it actually (unless I am misunderstanding something here), might be better to contribute to a TRADITIONAL IRA and then convert a little at a time so that we could avoid penalties if we withdraw in 5 years (but were under age 59-and-a-1/2)?

Did I understand this right?

This is a complex subject that is easy to get tripped up on. As Jluke mentioned this topic is discussed quite a bit--probably because it is so complicated.


Here are a couple more links for you:
https://fairmark.com/retirement/roth...ra-conversion/
https://www.bogleheads.org/forum/vie...58516#p4358516

https://www.bogleheads.org/forum/viewtopic.php?t=286154

Edited to add:

https://www.bogleheads.org/wiki/Roth_IRA

Edited to add:
You have to keep track of your converted funds to make sure they meet the 5 year qualification period. Some folks start a new Roth every time they do a conversion just to keep track. Or course, if you keep good records, you don't need to do this. (Also, you still need to keep track of the growth post conversion which would be subject to the normal Roth rules.)

[Scallywag]

This is a complex subject that is easy to get tripped up on. As Jluke mentioned this topic is discussed quite a bit--probably because it is so complicated.


Here are a couple more links for you:
https://fairmark.com/retirement/roth...ra-conversion/
https://www.bogleheads.org/forum/vie...58516#p4358516

https://www.bogleheads.org/forum/viewtopic.php?t=286154

Edited to add:

https://www.bogleheads.org/wiki/Roth_IRA

Edited to add:
You have to keep track of your converted funds to make sure they meet the 5 year qualification period. Some folks start a new Roth every time they do a conversion just to keep track. Or course, if you keep good records, you don't need to do this. (Also, you still need to keep track of the growth post conversion which would be subject to the normal Roth rules.)

Thank you. I think I might be better served consulting an accountant before touching the retirement accounts. Currently, I have no intention to do this, but we never know if there might be circumstances that might force us to touch this amount prematurely so this is good to know although our ROTHS might be our first stop, if that happens.

[LivingAlmostLarge]

Thank you. I think I might be better served consulting an accountant before touching the retirement accounts. Currently, I have no intention to do this, but we never know if there might be circumstances that might force us to touch this amount prematurely so this is good to know although our ROTHS might be our first stop, if that happens.

Actually you may not want to use your roth and instead touch anything in a regular 401k/ira. You may want to fill brackets depending on what the brackets and tax rules are when you take distributions. You may also want to take distributions even if you don't use it because you are still "married" and getting a bigger bracket. It is not something you can easily plan now for 20 years. I think maybe 5 years out but even then it's iffy. MOSTLY because the tax rules keep changing so quickly.

[Like2Plan]

You may also want to take distributions even if you don't use it because you are still "married" and getting a bigger bracket. It is not something you can easily plan now for 20 years.

That is where the Roth conversions while you are still married come in handy. That way, you pay the taxes at the MFJ rate but yet you maintain the tax advantaged future growth.