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Hi Everyone,
I did not want to hijack cologero's thread but I have a very similar question as him. But this is for my older sister (in her mid 40s). At the outset - she is a single mother with a disabled child and while her job is stable, she does not make much, so I am justifiably proud of how she's managed to accumulate about 120K in an old 401K (something I am still working towards). She plans to work until age 70 so has a good 25+ years left to go. This old 401K has 90K in 401k and the rest in a ROTH 401K (same employer).
She is invested in sector based funds and has 5 funds, at about 200 shares each. She also has large cap, mid-cap and small cap funds (although different sectors, of course).
(1) Should I advise her to cut down her holdings to about 2 or 3 funds, so that she has more shares of these 2 or 3 funds and can see larger gains (should markets climb) or is her current spread acceptable ?
(2) She wants to convert the pre-tax 401K to a ROTH IRA (ex-employer is not letting her convert within the plan, unfortunately) so that she knows exactly how much she will leave to her disabled son (who is not likely to ever be able to earn an income for himself and likely need care for the rest of his life). She is worried about taxes - any idea how to go about doing this so that she doesn't get a large tax bill all at once ? (Hubby and I are also in the same boat, btw, and want to rollover an old 401K into a Roth IRA - current employer not allowing his old 401K to be moved into the present one !). So really appreciate your feedback here.
What are your opinions on her next steps ? She continues to stash money away in her current employer's ROTH 401K and also has a small ROTH IRA (made possible by living rent-free and bill-free with our parents and sizeable child support payments - she will also inherit our parents' mortgage-free home after their time, so won't have to worry about housing -- aside from property taxes and maintenance -- at all, which is a HUGE relief to me). I wouldn't worry so much if my nephew wasn't disabled and potentially needing care forever, but it is what it is, and so would deeply appreciate your assistance for my sister's situation.
Thanks !
I did not want to hijack cologero's thread but I have a very similar question as him. But this is for my older sister (in her mid 40s). At the outset - she is a single mother with a disabled child and while her job is stable, she does not make much, so I am justifiably proud of how she's managed to accumulate about 120K in an old 401K (something I am still working towards). She plans to work until age 70 so has a good 25+ years left to go. This old 401K has 90K in 401k and the rest in a ROTH 401K (same employer).
She is invested in sector based funds and has 5 funds, at about 200 shares each. She also has large cap, mid-cap and small cap funds (although different sectors, of course).
(1) Should I advise her to cut down her holdings to about 2 or 3 funds, so that she has more shares of these 2 or 3 funds and can see larger gains (should markets climb) or is her current spread acceptable ?
(2) She wants to convert the pre-tax 401K to a ROTH IRA (ex-employer is not letting her convert within the plan, unfortunately) so that she knows exactly how much she will leave to her disabled son (who is not likely to ever be able to earn an income for himself and likely need care for the rest of his life). She is worried about taxes - any idea how to go about doing this so that she doesn't get a large tax bill all at once ? (Hubby and I are also in the same boat, btw, and want to rollover an old 401K into a Roth IRA - current employer not allowing his old 401K to be moved into the present one !). So really appreciate your feedback here.
What are your opinions on her next steps ? She continues to stash money away in her current employer's ROTH 401K and also has a small ROTH IRA (made possible by living rent-free and bill-free with our parents and sizeable child support payments - she will also inherit our parents' mortgage-free home after their time, so won't have to worry about housing -- aside from property taxes and maintenance -- at all, which is a HUGE relief to me). I wouldn't worry so much if my nephew wasn't disabled and potentially needing care forever, but it is what it is, and so would deeply appreciate your assistance for my sister's situation.
Thanks !
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