I fully depleted my Traditional IRA, there is a $0 balance now. However, I actually did this on purpose for a very good reason. I am utilizing a really awesome strategy for early retirement known as the Roth IRA Ladder. I love talking about the Roth IRA ladder strategy because it can allow you to retire YEARS earlier than someone else that is not planning on using the Roth IRA ladder because it saves you from paying a lot of federal income tax AND the dreaded early withdrawal penalty associated with retirement accounts.
Check out my video on how I am using the Roth IRA Ladder in early retirement!
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If you are considering draining your traditional IRA, you may be wondering if it is a good idea. After all, traditional IRAs are meant to be long-term investments, and draining them means you are taking money out before it has had a chance to grow. However, there are some situations in which draining your traditional IRA can be a smart decision.
First of all, if you are facing a financial emergency and have no other source of money, you may need to tap into your IRA. This could be due to a medical emergency, job loss, or other unexpected expense. In these cases, draining your traditional IRA may be the only way to get the money you need.
Another situation in which draining your traditional IRA may be a good idea is if you need to pay off high-interest debt. If you have credit card debt or other high-interest debt, it may make sense to use the money from your traditional IRA to pay it off. This can help you save money in the long run, as you will no longer have to pay interest on the debt.
However, there are some drawbacks to draining your traditional IRA. For one, you will be subject to taxes and penalties on the money you withdraw. Additionally, you will be missing out on the potential growth of the money in your IRA.
Ultimately, draining your traditional IRA is a decision that should not be taken lightly. You should consider all of your options and weigh the pros and cons before making a decision. If you do decide to drain your traditional IRA, make sure you are doing it for the right reasons and that you understand the consequences.
Check out my video on how I am using the Roth IRA Ladder in early retirement!
https://www.youtube.com/watch?v=FTXgZHX7iZg
Jesus Christ, your background distracts me a lot, was it intentional? The halo around your head. Instead of thinking about my IRA accounts I was thinking in my childhood at the Catholic Church.
I feel that government will try to double tax Roth later I put money in both Roth and traditional I think later on when I coast retire or kind of work part-time I will want to earn enough money to get my social Security points in active income which is around 6K a year or so. And then I would also want to put that money in a IRA Roth IRA or something along those lines so I could optimize my net income dig the video.
While having all your $$ in Roth accounts sounds great, would it not be better to keep some money invested in Traditional so that you would be able to withdraw from Traditional up to the top of the standard deduction? Since that money is taxed at 0% also?
Unless you've got a pension/annuity of some kind, which fills up the standard deduction, wouldn't this make more sense? And then 'Roth' it after surpassing the standard deduction?
I wish I had done the backdoor Roth IRA from the start but now I'm doing Roth conversion too, while the market is lower. Another advantage to this is the Trump tax breaks expire in 2026, so that's even more incentive to do it now before its taxed higher (I think about 3% per tax bracket).
Great explanation on the earned income profit from self employment added to the Roth. Roth Conversions and contributions are taxable for the tax year performed.