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retirement planning

If more people cooked at home they'd have more money.

Cooking is one of the most important lessons a parent can teach their children.

Less than half of all men cook it seems.

Cooking increased overall from 2003 to 2016.

The percent of college-educated men cooking increased from 37.9% in 2003 to 51.9% in 2016, but men with less than high school education who cook did not change (33.2% in 2016).

College-educated women who cook increased from 64.7% in 2003 to 68.7% in 2016, while women with less than high school education had no change (72.3% in 2016)

Women with less education spent more time cooking per day than high-educated women, but the reverse was true for men.
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https://nutritionj.biomedcentral.com/articles/10.1186/s12937-018-0347-9
 
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So my understanding is it is legal to "back door" money to a Roth IRA.

1. Have money in a traditional IRA
2. Convert it to an IRA
3. Pay the taxes and penalties on the money
4.Boom you have a an investment that's tax free upon withdrawal

- Can you do this for any amount of money?
- If you are eligible to put $6000 in a ROTH IRA is there any advantage to this?


I don't see how 401k is a farce. It's a gift of your taxes back.
 
HappyHighwayman said:
So my understanding is it is legal to "back door" money to a Roth IRA.

1. Have money in a traditional IRA
2. Convert it to an IRA
3. Pay the taxes and penalties on the money
4.Boom you have a an investment that's tax free upon withdrawal

- Can you do this for any amount of money?
- If you are eligible to put $6000 in a ROTH IRA is there any advantage to this?


I don't see how 401k is a farce. It's a gift of your taxes back.
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There's no limit on the amount you can backdoor into a Roth. It doesn't affect your annual contribution limit, so you can also continue to put in the $6k per year (I'm now at a combined $13k annual since my wife is over 50). Will probably roll mine over at some point, on the hope that A) my money keeps making money and B) my income and tax rate will be higher in twenty years than it is now.
 
HappyHighwayman said:
Right but if I roll over $100,000 I'd need to pay the tax on that income right?
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Yep.

We did Roth conversions right after retiring when our income was at an all time low which is the ideal time to do it.

We'd do more now but can't due to increased income as we bought 3 rental homes and we want to maintain our Health Care subsidy.

If you do it try and not hit the next tax bracket by measuring out your conversions over several years rather than all at once which could push you up to high incremental tax brackets.
 
Thanks! So for a younger person far from retirement there's no reason to worry about it for now? My income will likely rise.
 
While the way normal no penalty 401k withdrawals are taxed is less than ideal, the employer matching contributions up to X% part of 401k removes the 'farce' argument to me.

There's no Roth 401k for my employer, never knew it was a thing until now.
 
HappyHighwayman said:
Thanks! So for a younger person far from retirement there's no reason to worry about it for now? My income will likely rise.
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The advantage of doing it sooner than later is that as your money grows, the amount you'll pay taxes on grows as well. My witholding has been super high this year, and I'm expecting a big refund, so I may use this chance to take the hit and roll mine over.

If the market takes a significant shit, but your income is secure, that might be a good time for it.
 
HappyHighwayman said:
Thanks! So for a younger person far from retirement there's no reason to worry about it for now? My income will likely rise.
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If your income is relatively predictable do small amounts over the years but making sure not to go into a higher tax bracket to minimize tax effects.

TEgBG-2020-tax-brackets-3.png
 
You can pay us back by giving us the free CPA advice hotline number to HHAcctgDad ;)

Or website URL. Promocode: barf
 
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gnahc79 said:
While the way normal no penalty 401k withdrawals are taxed is less than ideal, the employer matching contributions up to X% part of 401k removes the 'farce' argument to me.

There's no Roth 401k for my employer, never knew it was a thing until now.
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Not every employee has that option available to them. Just like not every employee who has a 401(k) plan has a wide array of investment products to choose from.
 
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