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You don't pay a early 10% penalty on your Roth contributions or your Roth conversion amoint after a 5 year cooling period. Only pay a penalty on the gains
Good stuff Josh! I am slowly converting to Roth before I take SS at 70 in 2 yrs. I will convert up to IRMA penalty. Not going to get it all in a roth. But I will have different buckets of income. Brokerage, ira, roth ira, and savings accounts to pull from to make the right tax decisions. Might have to make QCD's, eventually!!
I am new to the stock market. Every stock that I bought so far, I was out of luck because I bought them when they were expensive. I feel I missed out on all the stock opportunities so far for the tech stocks.I believe having 75K yearly income would be a good investment so I want to plug all my savings into the stock market. I know this sounds a bit dull but I would like to know if I should learn investing or let somebody else (more capable like a FA) do it for me? Please share your thoughts. I am kind of tired of searching for a good stock to buy and losing all the good opportunities
Inheritance IRA?
I am coming into my dads IRA which was taxed deferred- should I put it all into Roth and pay taxes now?
I’m 55
The amount is approx 100,000
If someone told me to use a HELOC to pay my taxes to do a Roth conversion, I wouldn’t walk away. I’d run as fast As I could. Doesn’t sound like sound advice to me.
How long before our govt finds a way to tax Roth distributions AGAIN?? I find it hard to believe that this govt will allow all that money to get to people’s hands without getting its grubby hands on some of it
Can I convert my IRA to Roth and have it apply to 2022 or will it apply to 2023? If I do it in Jan/Feb 2023?
I understand converting in a down market year as you get a higher precentage converted for the same amount of taxes. I have been thinking about it but could not bring myself to incur more taxes this last year.
Makes no sense to convert all. If you keep your RMDs below the standard deduction you’re gonna be net ahead. Also, the interplay with the ACA is important if you need to show some income to get the subsidy. YMMV
I needed to do this 15 years ago. But given the balance, the tax hit was just so much, I never pulled the trigger. I should have done it, no doubt. If you encourage just one person to do it, this video has been a success!!! One HUGE advantage you didn't mention is "means based benefits". Medicare is means based, and the higher your income in retirement, the more you will pay for Medicare. Over the years ahead, I would expect to see more benefits go to means testing. Moving from taxable RMDs every year to tax free Roth withdrawals will make all the difference. I did convert part of my holdings, around 10%. I knew I needed to go BIG on conversions. I have enough in taxable accounts, so I really have no excuse….. Its on me.
So cue the stock market to drop another 20% – thanks Josh!
https://www.youtube.com/watch?v=rCLmUol4xqo
I converted all my IRA to Roth first week of this year! FREEEEDDOOOOMMMMMMM!
I never spent to the level of my income. I always lived below my income and squirreled away the extra into retirement of savings. I did not do without while living either. I just didn't try and keep up with the Jones'. Allowed me to retire at 52 five+ years ago. Also, I did a full conversion a while back when the IRS had some sort of deal. I paid the tax bill then but come 59 1/2 and I can start drawing from the Roth completely tax free. Makes tax planning pretty easy.
32 degrees is cold?
YES!!!!
I always learn something for you Josh
Unfortunately, all of my retirement is in 401k and I'm retiring early this year. But I do have $300k in cash, but I;m also in 36% tax bracket. My advisor is not recommending any conversions, we have done the 7500 back door the last few years.
Reason for Roth conversion is no further taxes at all on any earnings. Say you have $200,000 in Roth IRA and you trade stocks along with dividends make $20-30K that year, you pay no tax on any profits. A good thing, only bad thing is that if you have a loss you can not take off any losses in Roth accounts which suck. No further tax on this money is fantastic.
Preach it Brother Josh.
Marginal rate is too high. Maxing out the 401k pre-tax and doing Roth IRA, HSA, and brokerage accounts for diversification of my tax options. Might consider doing conversions in the future when my bracket drops which is guaranteed to occur.
Love your videos Josh. Been watching you for a couple years. Always look forward to your stuff. Don’t chime in much but you always seem to act like regular people (and mentioned it here making 170k) make over 60k a year. Those might be your clients but I do want to remind you that’s not your viewers. Keep the videos coming brother.
Me Too – 10 years to convert IRA to ROTH. Paid more taxes but the 2017 tax rules helped. 2022 was a charity instead of RMD. The balance of the IRA was also donated to charity and the IRA was ZERO. The 2022 taxes on a 6 figure income is less than 2%. That should continue for the rest of our lives. When the Widow Tax Trap hits, it won't be too bad not dealing with RMDs. The other side of the coin is the kids inherit all the stuff TAX FREE. It also helped that we delayed taking SS – no tax on SS and the delayed payments grew 8%.
You briefly mentioned HELOC to pay taxes, then later credit card transfer and zero interest for a year. How do different tax payment strategies compare when you don’t have cash to cover the tax liability of the conversion?
Congratulations on freeing yourself! I'm trying to do the same. Kind of afraid to see what I will owe in taxes this year, but I feel I'm better off doing this now.
Congratulations Josh!!! Wow, all at once. I am stretching it out over 8 to 9 years to cut down on taxes. Great video.
You don't have to pay penalties in retirement. Best to have some of both, Roth and traditional. And Roth is not tax free, it is after tax.
Josh, I heard you say that when you set money aside to pay taxes you invest it in VTI in your Roth account… Did I hear that right?…I’m on SS now at 65, and I take out $500 a
Month myself and put it in my credit union account that has a good interest rate per month, I have VTI in my investment account and in my Roth IRA, is that something I could be doing in order for it to grow better than in a credit union account?…Like to hear your thoughts…Thanks!