Max the 401K vs Roth - Page 2 - TigerDroppings.com

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Oenophile Brah
USA Fan
The Edge of Sanity
Member since Jan 2013
4644 posts

re: Max the 401K vs Roth


quote:

I say max the Roth now while you can because once you're done with residency and making the big bucks you'll probably be ineligible to contribute to the Roth.

I agree, but with one thing to add. I would suggest not creating or contributing to a regular IRA. Once your income exceeds the Roth limit, you can do the backdoor Roth rollover. However, if you have an existing IRA you would pay taxes on any IRA accounts you might have.

That's my understanding of that process.






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Hawkeye95
Iowa Fan
Member since Dec 2013
2601 posts

re: Max the 401K vs Roth


quote:

But you may be right - had counted on those Roth distributions to be tax free when I am an old man.


just remember SS went untaxed at one point.

it was that "conservative" reagan that did it.






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MDTiger 13
LSU Fan
Brandon, MS
Member since Nov 2010
516 posts

re: Max the 401K vs Roth


How does the backdoor Roth rollover work?





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Hawkeye95
Iowa Fan
Member since Dec 2013
2601 posts

re: Max the 401K vs Roth


quote:

How does the backdoor Roth rollover work?


high earners that can't get a roth contribution, convert their traditional IRA to roth. So they can make a traditional IRA contribution (taxed) and then "convert" it to a roth.

this only works if you don't have an existing traditional IRA. If you have 100k+ in traditional IRAs, you get taxed on the 100k+ when you do it and its painful.

Pretty much when you get to be a high earner, you lose these retirement niceities.

but of course, you are making $200k a year to hit that and should you complain too much?






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GoCrazyAuburn
Auburn Fan
Member since Feb 2010
13646 posts

re: Max the 401K vs Roth


quote:

just remember SS went untaxed at one point


There is a slight difference between a Roth and SS.

quote:

it was that "conservative" reagan that did it

Okay?






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Volvagia
LSU Fan
Baton Rouge
Member since Mar 2006
40381 posts

re: Max the 401K vs Roth


quote:

this only works if you don't have an existing traditional IRA. If you have 100k+ in traditional IRAs, you get taxed on the 100k+ when you do it and its painful.



This in incorrect.


You can do partial rollovers to spread the tax liability (or tax exposure). It isn't a all or nothing deal.



This post was edited on 3/20 at 12:44 pm


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Hawkeye95
Iowa Fan
Member since Dec 2013
2601 posts

re: Max the 401K vs Roth


quote:

This in incorrect.


You can do partial rollovers to spread the tax liability (or tax exposure). It isn't a all or nothing deal.

when I talked to my financial advisor, he told me what the bill would be and I had sticker shock.






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Oenophile Brah
USA Fan
The Edge of Sanity
Member since Jan 2013
4644 posts

re: Max the 401K vs Roth


quote:

You can do partial rollovers to spread the tax liability (or tax exposure). It isn't a all or nothing deal.

I don't think that's accurate with backdoor Roth's. All IRA money is taxed in that process.






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