Should I Convert My Retirement To Roth?

Can't take it with you when you go .

The Roth conversion is most favorable when the person is going to get hit with the required minimum distributions.
Otherwise, the taxpayer is looking at paying taxes today at today's rate versus holding out for retirement when their rates are likely lower and they might be able to avoid taxes on a Traditional IRA - home purchase or medical expense. So waiting can be more favorable to the taxpayer.

I think the stock market will do well in 2024, so I'm thinking of putting $220,000 into stocks for my retirement. Any advice on doing this safely? Also, any important tips for the current financial situation?

why you want to wait until you are 85 yrs old to access your money or enjoy life? It doesn't make sense at all. Why not starting making lots of money when you are in your 40's so you can start enjoying in your 50's. The only people who are going to enjoy your money is the Hospitals when you are 85

Ramsey is the guy who fills in for the failed U.S education system. Economics should have been required to graduate, and it should have always been a core course like math. So taught in every grade. That said he's teaching to the financially illiterate, so it's no wonder they're so thankful and soak up most of what he says.

Back door Roth for self employed at over at 70, how to make it earn quickly

Spread it out over a few years to keep the tax rate on the conversions down. If you do it all at once you will pay a much higher tax rate on the funds you convert.

So if you already knew all of this why did you call and ask him?

Oh boy what a good time he’s going to be having with that money at 85 LOL

With taxes set to return to pre-Trump levels in 2026, it may be worth taking the hit now at the lower rates than to pay the taxes thru the 401k later when they go up 3 to 4% and the standard deduction is cut in 1/2.

I just switched up my Roth IRA to 50% SCHD, 25% SCHX, 25% SCHG, and my Roth 401k is 70% vanguard S&P 500 index, 20% vanguard growth index, and 10% vanguard international index. Seeking best possible ways to grow $350k into $1m+ before retirement, I'm 55.

As a soon retiree, keeping my 401k on course after a rocky 2022 was my top priority, but I have been reading of lnvestors making up to 250k ROI in the stock market, and it’s overwhelming. any recommendations to scale up my ROI before retirement will be highly appreciated.

At 70 with a few dollars in an old company's 401K. What to convert it to as I have to withdraw it soon, Dave.

Even if it's on a Roth, you still can to take RMDs.

Bad years in the market are good years to do Roth conversions.

Roth conversions with cash on outside not out of ira

I think you should invest in all of them.

Need to consider IRMAA, effect on Social Security income and other tax implications when doing a Roth Conversion. It requires a complete analysis to determine if it should be done. Wrong Dave: the professionals talk about Roth Conversions all the time. Using cash to pay the taxes can be more beneficial. Roth Conversion is two steps: 1. Remove some funds from your Traditional IRA-this is a taxable event (ordinary income rates). 2. Deposit into a Roth (Five year rule applies). Lots to think about - these are only a few.

“That money will be going to the kids” Pfttt! Fuck the kids. Show them how to invest, THATS ALL. “To the kids” 😂😂😂😂. I’m using MY money I busted MY ass all these years to save and built. “The kids” 🤣🤣🤣🤣

Yeah, you want to make them USELESS, ENTITLED PRICKS? Yeah, leave it to “the kids”…..

Yes you should do the conversions between 65 and 7x (when you have to take RMDs). Convert up to the 20%ish tax rate for an effective tax of 10-12%. Do so that your 401k is almost eliminated.

That said, probably not a factor for many who barely have savings in their 401k.

<<<Hit 200k today. I'm really grateful for all the knowledge and nuggets you had thrown my way over the last months. Started with 14k in June 2022>>>>

69 and looking to convert some amount to ROTH this year and in 24 and 25 before tax rate go back up in 2026. It's always been said doing conversions late in life isn't a good strategy since it won't grow to offset the taxes paid at conversion. No heirs to pass to, so this is all about reducing RMD tax liability in the future. Too bad so complicated. Oh well. Thanks Dave for all your "life" advice. It has worked well for me.

I'm converting and do it in Jan and send tax estimates same time. Others say you can wait until as late as tax deadline the following year. I worry about underpayment penalties. When do you have to pay the tax estimates?

I love how she helped dad and blocked the caller from talking 😂❤

The rule change that requires all inherited IRAs to be liquidated within 10 years of receiving them completely screwed up the idea of leaving my kids Roth IRA money that they could keep “forever”. I would think that distribution change would have a big impact on this decision.

Keep in mind you can’t access that convert $$ for 5 years

The widows tax trap should have been part of this discussion. If either spouse dies, the tax rate reverts to 'single' filer, which increases the tax rate. In addition, the Trump tax cut could expire and not be replaced.

would it not be better to wait until you retire to move some of the money to the Roth - your tax bracket is typically higher while you are working so the tax bite on the conversion will be higher than when you're retired?

Question - we have all IRAs and no Roths. We'll start withdrawing in 5 years. Should I convert anything, or just start some new Roths?

This is a no brainer...

This is a bragging show, callers just show off their net worth instead of seeking advices.

With Roth IRA, the money you are contributing has already been taxed. At any time for any reason, you can withdraw your contributions tax-free and penalty-free. Additionally, any earnings on investments can also be withdrawn tax-free and penalty-free, Not sure how much to contribute, I'm still at a crossroads deciding if to liquidate my $338k stock portfolio.

Probably makes sense to do a conversion to max out the 22% bracket and have a better bsalance of Traditional and Roth

Weird suggestion? Every advisor I have talked to - including my ELP - suggest traditional to Roth conversion.

Is it illegal to Rollover a old employer 403B plan/funds to a Roth IRA or am I required to make sure funds are rolled to a Traditional IRA?

Investing in Roth IRA can be a good choice since they are funded with after tax dollars, your contributions can grow tax-free over time. When you withdraw money from your Roth IRA in retirement, you won’t have to pay tax on it, which will help you keep more of your hard-earned money. Compounding is the process of earning interest on your initial investment, as well as on the interest that investment earns. This means that over time, your investment can grow exponentially. So the earlier you start investing, the more time your investment has to grow through compounding.

A few comments regarding this. If I was young and worked for a company that had a 401k plus employer match I would definitely take advantage of that. I would open a traditional roth while working and contribute to what you can. When you retire convert all or a portion into your traditional roth. Most people today when they retire will be in the same tax bracket or higher. If you are in a lesser tax bracket then you probably did not save enough. So your tax situation for the most part will probably not change if you have both. Even if you and your spouse worked 40 or more years then your social security will be pretty significant. Couple that with any withdrawals and you increase your income. So really the one big advantage in this case regarding a traditional roth is that it is tax free but it also does not count against social security taxation when calculating your provisional income. This is a nice little perk since most of us middle class are on a FIXED income. If retired, then at age 65 everyone needs to sign up or go on Medicare which can be another significant cost per month depending on the options you select after part A & B. Remember parts A&B do not provide a complete blanket of coverage. You also need to consider medicaid costs which will significantly affect your spouses ability to live if one of you end up in a nursing home. Just my .02.

Ramsey is a hack. "It will grow tax free". What if it doesn't grow? What if it tanks? This hack assumes that the market always goes up. What always goes up in the M2 money supply, so stocks just take more and more crappier dollars to buy them. Nominal or REAL gains, learn the difference.

Caller, get to the point.

Your better off stop contributing to your 401(k) traditional and instead put all the money into Roth. If you have over 20 years before you have to take it out your brother off having both buckets if you don’t really need a traditional which you may not understand if you do or don’t, you can never predict the future and if you can then, let me have that crystal ball because I’d love to 10 times my money at this point. I would instead put any contributions into a Roth or HSA, and keep both invested until you retire, and then anything that you had left over you can pull out of your 401(k) traditional, not touching your Roth or HSA unless you need it.

72 no guarantee you'll make it to that.

The general timeframe is 10 years. If you aren’t going to need it for 10 years then convert it

In this context, it is DISGUSTING to realize that our filthy government steals so much from us. 600 down to 400 just like that. ThIEVES!

Investing in Roth IRA can be a good choice. I have been managing my $200k portfolio with ease. When I withdraw money from my Roth IRA in retirement, I won’t have to pay tax on it, which will help me keep more of my hard-earned money.

I wonder if people that experienced the 2008 crash had it easier because. my portfolio has lost over $27000 and I don't see my retirement turning out well when I can't even grow my stagnant reserve

---Once taxes are paid that money is long gone, goodbye with no opportunity for further investment growth. The idea that a person should covert their entire traditional 401K to a Roth 401k and thus pay all of those upfront taxes presumes that during their retirement years they will draw down their entire traditional 401k and thus would have to pay taxes on the back end on all of their tax deferred contributions and investment gains.
----Only if a person draws down their entire traditional 401k during their remaining life will they be paying taxes on all of their tax deferred contributions and investment gains. Normally, they will not draw it down entirely but will leave some portion (perhaps a considerable portion) of their 401K to their heirs. That portion can stay invested and continue the tax deferred growth. Thus, the retiree during their remaining life, will never pay back all of the taxes that they deferred, and their heirs, like them, will pay taxes only on the portions they draw down.

I have no idea what it feels like to love a job and stay working when you could retire.

If you are looking at taking social security a Roth makes more sense because of the way social security taxes outside income. People in this situation will know what I am talking about. Maybe someone there can offer more insight.

I want to start investing 600 a month into a roth. When I hit 65 I want to retire and take out of it once a year to live on. If I have 1.2 million in my roth I would take out 125k each year to live on. Is that a bad idea?

The market crash and high inflation are stressing me about retirement. Despite the challenges, I know investing is a long-term game, so I'm staying focused on the future.