Open a Roth when retired

[jasg]

Because of income and existing IRA I was never able to take advantage of Roth IRAs, standard or back door.

Now, at nearly 65 and retired, I realize that I can do both a rollover and contribution and end up with a 25k Roth this year.

Has anyone here opened a Roth after retiring? Any regrets?

 

[Gatordoc50]

Because of income and existing IRA I was never able to take advantage of Roth IRAs, standard or back door.

Now, at nearly 65 and retired, I realize that I can do both a rollover and contribution and end up with a 25k Roth this year.

Has anyone here opened a Roth after retiring? Any regrets?

Don't you have to have earned income to contribute to a Roth?

 

[omni550]

Don't you have to have earned income to contribute to a Roth?

I think he may be talking a conversion....

Post-Retirement Roth Conversion
It can make sense to convert a traditional IRA to a Roth IRA even after retirement.
Many people believe it doesn't make sense to convert a traditional IRA to a Roth IRA late in life. In reality, many retirees have a longer life expectancy than you might expect. What's more, a partial or complete conversion can provide significant tax savings even if the owner of the IRA has only a very short life expectancy. The benefits aren't present in all cases, so careful analysis is required to determine whether a conversion makes sense, how much to roll over, and when. As explained below, in most cases the conversion will make sense if all of the following are true:

• All your withdrawals from the converted IRA will be free from taxes and penalties.
• You'll be able to pay taxes on the conversion from another source. In other words, you won't use money from the IRA to pay taxes. (Sometimes you can benefit even if this is not true.)
• Most importantly, you won't pay tax on the conversion at a significantly higher rate than the rate that would apply if you left the money in your traditional IRA, taking it out when you need it later in life. To avoid this problem you may need to do only a partial conversion.

omni

 

[Onward]

Now, at nearly 65 and retired, I realize that I can do both a rollover and contribution

You can't make a contribution unless you have earned income (i.e. from a job or self employment).

 

[GrayHare]

If when filing taxes you itemize deductions, it may be tax advantageous to NOT convert to Roth. Since tIRA withdrawals are ordinary income, that income can be reduced for tax purposes by deductions, potentially making it tax free. Even so, there remain other reasons you may want Roth, for example, no RMDs.

 

[QMAN]

Think people are saying similar things. Key is that this is a tax planning and strategy play. IF say not a small portion of your net worth is in a 401k, and you have to pay taxes as if ordinary income when you withdraw, then you will be paying taxes for a very long time. If say you have after tax investments on which to can use to pay your living costs, then if you keep close tabs on the IRS ordinary income rates, there could be a good argument for rolling just enough out of traditional IRA into a Roth, and paying taxes at the lowest tax rate possible.

 

[jasg]

DW has income this year, possibly next. So I can contribute.

I may do partial conversions, depending on taxable withdrawals, but I can also split tIRA into pre and post tax next year.

A small part of portfolio, may never be needed by me or DW but could leave it to grand kid.

 

[travelover]

DW has income this year, possibly next. So I can contribute..........

Correct, I've been doing this for 6 years as DW slaves away.