Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Contributing to a Roth after retirement
Old 01-29-2014, 02:16 PM   #1
Recycles dryer sheets
 
Join Date: Jan 2014
Location: Austin
Posts: 496
Contributing to a Roth after retirement

Hi everyone, I've been lurking on this forum for a couple of years now and it's been a great help so I thought I'd ask my first question.

I'm 55, DW is 51. I plan on retiring this year, DW will continue to work at the job she enjoys. We maintain separate taxed/tax advantage retirement accounts.

We file taxes jointly, and her annual income is roughly $80K.

My retirement assets are roughly 33% in a 401K and 66% in taxable accounts.

So aside from SS, the brunt of my retirement income will come from a very large amount of savings and my 401K will remain untouched until I reach RD

I can "withdraw" much more than I need each year from my savings until I have to start RD from my 401K.

So my question is - how much, if any of my after-tax dollars from my taxable investment accounts can I invest into a Roth IRA after I have retired?

Is it even possible? Does it make sense to do so?

Thanks for any guidance.
__________________

__________________
Looking4Ward is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-29-2014, 02:27 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
braumeister's Avatar
 
Join Date: Feb 2010
Location: Northern Kentucky
Posts: 8,630
Quote:
Originally Posted by Looking4Ward View Post
how much, if any of my after-tax dollars from my taxable investment accounts can I invest into a Roth IRA after I have retired?
None. You can only put money from earned income into an IRA.

But you and your wife can both fund them up to your limits based on her earnings.

Look up "spousal IRA" for more detail.
__________________

__________________
braumeister is offline   Reply With Quote
Old 01-29-2014, 02:38 PM   #3
Thinks s/he gets paid by the post
Dash man's Avatar
 
Join Date: Mar 2013
Location: Limerick
Posts: 1,672
Braumeister is correct. I retired last year and my wife is still working. Based on her income we both funded a traditional IRA and immediately did a conversion to a Roth IRA. But our after tax investments are staying in taxable accounts.
__________________
Dash man is offline   Reply With Quote
Old 01-29-2014, 02:43 PM   #4
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 3,863
+1 to contributing to a Roth based on DW's earnings.

You may be able to roll over portions of your 401k into a Roth IRA. You definitely can rollover all of your 401k into a traditional IRA and then Roth convert portions of the tIRA. You have to pay taxes on the Roth conversion, so it may be nice to stay within the 15% tax bracket. If you project RMD's will be coming out in the 25% tax bracket, then Roth converting into the 25% tax bracket now may be beneficial. The net effect is moving some of your taxable money (the amount you pay in taxes) into the Roth. This may work even better when DW retires and you income drops again.
__________________
Animorph is offline   Reply With Quote
Old 01-29-2014, 02:46 PM   #5
Recycles dryer sheets
 
Join Date: Jan 2014
Location: Austin
Posts: 496
I had actually looked up that term and it only confused me more!

So if I withdraw $50k from my savings and DW takes home $60K the same year, we can contribute up to (??) to my Roth IRA? And since they are after-tax dollars, does it really matter where the dollars came from as long as one of us had earned income that year?
__________________
Looking4Ward is offline   Reply With Quote
Old 01-29-2014, 02:48 PM   #6
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 3,863
Oh yeah, one other thing I just found out for Roth contributions. They are limited if your income is above $188k modified AGI (that's 2013's limit, I haven't memorized 2014's). We've all known that for a long time. But the "modified" part of the AGI includes a subtraction for Roth conversions. So you can Roth convert your AGI above the income limit and still make a normal Roth contribution. We'll be able to do that for 2013 and 2014 I think.
__________________
Animorph is offline   Reply With Quote
Old 01-29-2014, 02:54 PM   #7
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 3,863
Quote:
Originally Posted by Looking4Ward View Post
I had actually looked up that term and it only confused me more!

So if I withdraw $50k from my savings and DW takes home $60K the same year, we can contribute up to (??) to my Roth IRA? And since they are after-tax dollars, does it really matter where the dollars came from as long as one of us had earned income that year?
It doesn't matter where the money you contribute comes from. The Roth IRA contribution limits are $6500 per person when you are 50 or over. Your DW may not be able to contribute if she is covered by a pension plan. You plus DW must have enough earned income to equal or exceed the amounts you both contribute.

Roth conversions are not limited, but you may not want the tax hit all at once.

You can do a quick search at www.irs.gov for the exact details.
__________________
Animorph is offline   Reply With Quote
Contributing to a Roth after retirement
Old 01-29-2014, 02:56 PM   #8
Thinks s/he gets paid by the post
Dash man's Avatar
 
Join Date: Mar 2013
Location: Limerick
Posts: 1,672
Contributing to a Roth after retirement

Quote:
Originally Posted by Animorph View Post
+1 to contributing to a Roth based on DW's earnings.

You may be able to roll over portions of your 401k into a Roth IRA. You definitely can rollover all of your 401k into a traditional IRA and then Roth convert portions of the tIRA. You have to pay taxes on the Roth conversion, so it may be nice to stay within the 15% tax bracket. If you project RMD's will be coming out in the 25% tax bracket, then Roth converting into the 25% tax bracket now may be beneficial. The net effect is moving some of your taxable money (the amount you pay in taxes) into the Roth. This may work even better when DW retires and you income drops again.

Just a note for if you're considering rolling over your 401k into an IRA. The 401k has some legal protections from lawsuits and bankruptcy that an IRA will not have. If you have a good 401k, I'd suggest you keep it there. If you do choose to move it to an IRA, consider getting an umbrella policy to cover liability up to your net worth. Your insurance company should offer them.
__________________
Dash man is offline   Reply With Quote
Old 01-29-2014, 03:14 PM   #9
Thinks s/he gets paid by the post
 
Join Date: Sep 2006
Posts: 1,322
Quote:
Originally Posted by Dash man View Post
Just a note for if you're considering rolling over your 401k into an IRA. The 401k has some legal protections from lawsuits and bankruptcy that an IRA will not have. If you have a good 401k, I'd suggest you keep it there. If you do choose to move it to an IRA, consider getting an umbrella policy to cover liability up to your net worth. Your insurance company should offer them.
Depends on state laws. In MA where I live IRAs are protected up to one million dollars from creditors and liability lawsuits.
__________________
Corporateburnout is offline   Reply With Quote
Old 01-29-2014, 04:49 PM   #10
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 2,936
Quote:
Originally Posted by Corporateburnout View Post
Depends on state laws. In MA where I live IRAs are protected up to one million dollars from creditors and liability lawsuits.
Do you know if you have to file for bankruptcy to get this protection?
__________________
kaneohe is offline   Reply With Quote
Old 01-29-2014, 05:45 PM   #11
Thinks s/he gets paid by the post
Dash man's Avatar
 
Join Date: Mar 2013
Location: Limerick
Posts: 1,672
Quote:
Originally Posted by kaneohe View Post
Do you know if you have to file for bankruptcy to get this protection?

You'll need to check your state laws on that one.
__________________

__________________
Dash man is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Should I be contributing more to my retirement account? bank5 Young Dreamers 30 03-18-2009 06:39 PM
Contributing to a Roth IRA? guitarplayer FIRE and Money 16 01-27-2007 03:17 PM
Contributing to Roth IRA and Traditional IRA mrinvest Young Dreamers 18 11-22-2006 11:45 AM
Contributing to Roth IRAs while one of couple is FIRE'd LOL! FIRE and Money 4 06-26-2005 03:04 PM
Worried about over-contributing to 401k & Roth? soupcxan Young Dreamers 29 09-25-2004 04:25 PM

 

 
All times are GMT -6. The time now is 05:14 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.