Comments on: How To Rollover Your Old 401k [And Should You Do It]

By: Robert Farrington

Robert Farrington — Tue, 14 May 2019 16:38:22 +0000

In reply to Drew. Your logic is solid (view the current tax brackets here), but don't ignore your own living expense needs while attempting to do Roth conversions. Furthermore, don't dismiss the potential for tax hikes and tax bracket income level changes. We are at historically low tax rates. Reversion to the mean is a thing, and based on our current budgetary needs as a country, taxes will only rise.

By: Drew

Drew — Tue, 14 May 2019 04:06:50 +0000

If you plan to retire early, I would think you would want to stick to traditional 401k so you get the tax deferral assuming you are in a >=12% tax bracket now. Then, when you retire (no income) the traditional 401k can be rolled into traditional IRA and from there, you can convert something like $79k a year to ROTH. That gets taxed as income, but that stays at the 12% bracket (if married filing jointly). That could be higher in the future, but I doubt the low end of the bracket is where the tax rate is going to be increased. If you are retiring early, then you still have a lot of time for that money to grow in the ROTH IRA. I guess it depends on how much you expect to have in you deferred retirement accounts and at what age you think you will retire.

I could be wrong and would be glad to hear if others think this is bad logic.

By: Tom

Tom — Sat, 27 Apr 2019 14:19:51 +0000

Less restrictive in the ROTH scenario.

By: Tom

Tom — Sat, 27 Apr 2019 14:17:50 +0000

Definitely roll it over to a Roth IRA. Bite the bullet and pay the taxes. Then you will be done with taxes FOREVER. You now have unlimited investment opportunities. Individual stocks(which you don’t have now, or ETFs, MLPs, and others). If you are lucky, maybe in the future your income will opt you out of the ROTH option, so take advantage of it now. Also when you get ready to retire or will the assets to your heirs, the distribution rules are much more restrictive. GOOD LUCK in the future!

By: Robert Farrington

Robert Farrington — Mon, 08 Apr 2019 03:50:27 +0000

In reply to Bill. Why did you choose an active manager? You can easily roll over your IRA to any IRA provider and invest in low cost index funds (even at Fidelity). Check out our top choices for low cost IRA accounts.