(08-27-2021, 07:24 AM)ken-do-nim Wrote:I think there may be a brief wait time. I bet the clock starts on the account's born date? That's an easy fix. Just start a ROTH IRA and drop a couple K into it a couple years before retirement and roll yuor employer account into it later. As the divs are pulled you pay the tax of course. Your CAP gains can compound awhile longer tax free.(08-26-2021, 09:52 PM)fenders53 Wrote:(08-26-2021, 08:46 PM)ken-do-nim Wrote:Ken,(08-26-2021, 12:49 PM)ChadR Wrote: I would keep it to what it's current type is. I'm a big proponent of delaying taxes for as long as possible. If you really want to move some to a ROTH, keep the ROTH conversion to an amount that won't put you into the 22% tax bracket or higher. On your next job, put some into the ROTH 401(k) instead of it all into the traditional 401(k) if you want to have more in a ROTH. Or if you can, open up a ROTH IRA along with what you're contributing into your 401(k).
Hmmm...
At work the matching is 3% if I invest 6%, so I put 6% into the ROTH 401k. I'm currently planning to draw down the entire ROTH portion of my 401k at age 60 and immediately add it to the dividend payout machine. The deferred portion of my 401k I'm assuming has to be withdrawn in small amounts over time to minimize the taxes. I'd ideally like to have it all drawn down by the time I'm 70, so that my dividend payout machine is going at full throttle. Should I reconsider?
You are aware you can convert your ROTH 401K to a ROTH IRA at that time right? You can buy dividend stocks or most anything equity or bond related. Leveraged ETFs is about the only thing I can't do since I rolled mine. (or before).
I am definitely not trying to give tax advice, but I've heard a number of planners and accountants say they often advise using your ROTH last. A plan is good but things change in 30 years. Tax rates and life situations. Late in my career I was contributing 17% and a 5% match. Amassing a decent sized tax advantaged account is the one thing that surely gives you more options later.
Actually, I had no idea! That's awesome!!! So basically, when I'm retired, my ROTH account(s) equities can generate dividends tax-free, and then I pull those dividends out to live on? Or is there some catch, like you have to wait 5 years to pull new dividends out?
It will work for you. You just can't gamble too much with this account. I am allowed to do options but it's more conservative in nature. They won't let me naked short MRNA lol.
As always, I am not your financial nor your tax advisor. Neither is Chad but he knows the rules.
