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Old 03-13-2008, 09:13 AM   #41
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Originally Posted by jIMOh View Post
As you start forumlating the strategy to withdraw, consider this:

Roth conversions have a 5 year rule. Meaning what you convert now can be withdrawn penalty free for 5 years. Starting now might help, but you cannot convert a 401k to a Roth- if you are still working. If you do find a way to do this, please post it here.
former employer 401ks....

As far as current employer 401k - when I get close to my potential retirement date - I'll talk about going part time and/or contract employee. Perhaps do that for the last few years.

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Old 03-13-2008, 09:22 AM   #42
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Originally Posted by retire48in2018 View Post
former employer 401ks....

As far as current employer 401k - when I get close to my potential retirement date - I'll talk about going part time and/or contract employee. Perhaps do that for the last few years.
The the former 401k (which is now either a rollover into current 401k, still in old 401k or in a rollover IRA) can be converted.

If in current 401k, the statements should show a "rollover" portion which is always tracked on it's own. I had this (we were bought out in 2000) when my 401k was rolled into new 401k without any action from me. It turns out this "rollover 401k" could be extracted from 401k and rolled into an IRA (based on plan rules) at any time. Who knew?

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Old 03-13-2008, 09:37 AM   #43
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I'm not sure if this helps but I think there are tax deferred pension contribution plans in which you can take after-tax money and place them into the plan account and later rollover the after-tax contribution and the tax-deferred income/interest into two separate Roths. The after-tax contributions have no real tax consequences when rolled-over, as you have already paid the taxes on these amounts, so it's not really a conversion. But the rollover of income into another Roth would be a true conversion, with some tax consequences. So, what does this mean for planning?

For me, it means that perhaps, if I have a pile of after-tax money, I can contribute it to a tax deferred plan and let it grow and then rollover/convert in 2010. For Federal employees under CSRS, I believe they can do this under the Vountary Contribution Plan and state/municipal employees might be able to do this under 401A or 457 Plans that allow for after-tax contributions to the plans.
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Old 03-13-2008, 02:44 PM   #44
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ChrisC - you have just decribed a 401(a) - I have one where I work - employer contributes tax deferred and I contribute after-tax - this is in addition to a 403 (b) which is tax deferred (basically a 401 (k) for nonprofits) as well as defined benefit plan, which is not COLA'd -

Great thread, although it is proving to me that tax management will be our issues in retirement and not necessarily income to cover costs. We have five separate pensions as well as after tax and tax-deferred accounts - we have a possible 10-12 year timeframe where we will only have one pension and then the pensions start coming fast and furious from age 60 on - some COLA's, some not. Our plan was to draw down the after tax during the 10-12 years - as well as convert some of the tax deferred to Roths - we may need to rethink that especially with the RMDs on the horizon.

However, it may all be moot if the tax rate goes up significantly...which I believe it will for both incomes and capital-non-capital gains, let alone local sales, property taxes, etc.
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Few More Tidbits
Old 03-13-2008, 04:05 PM   #45
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Few More Tidbits

I finally got a minimal web presence on Geocities to post some pdf charts that go with the original post. Four of them are at: index

The first three are supersets of the three in my original post. I.e., each has two more graphs per chart than the original in order to show two more scenarios:
  1. Min RMD -- Target Roth converting so as to keep MRDs from ever exceeding our personal IRA withdrawal needs. I.e., we wag the tail, the tail doesn't wag us.
  2. Min 25% bracket -- Target Roth converting so as to keep us out of the 25% bracket for life after age 70.5.
These are both pretty heavy conversions, especially the second one. Neither fares well in poor economic conditions, presumably because the early hits to portfolio value can just never catch up during such conditions.

The fourth shows how the individual accounts fare over the years with scenario 2, the best choice for our situation.

Again, thanks for all the discussion. The reason for trying to model this stuff in detail was to deduce from the generalizations I've read about down to our particular situation.
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Old 03-13-2008, 05:13 PM   #46
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I am a large number of years off from ER, but I am planning on using one of jIMoh's plans. I have no, nor plan to receive any type of pension, so it will be me and SS (maybe).
The anticipated plan is to pull monies out of 401(k) till I hit max tax bracket at 15% and supplement rest with Roth monies. The key is to have enough in the Roth's to be able to supplement.

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