Should I move 7K to Roth IRA (last year to do so)

[badatmath]

Retired 4/1/23 so 2023 last year I can contribute to a ROTH IRA. 22% bracket this year.

I would estimate my future bracket to be 12-22% so kind of no point except maybe slight growth in the fund over leaving it sit in savings and in reality probably I will spend it to live.

2024 income is going to be so low that I will not even need to file taxes - so that is a separate issue that just occurred to me today. But perhaps another vote in favor of not transferring the money.

 

[pb4uski]

I think I would do it... it can be withdrawn at any time and will grow tax-free. For spouse as well if you are married.

 

[pb4uski]

Last year that he has earned income needed to make contributions.

 

[Midpack]

Last year that he has earned income needed to make contributions.

I misread contributions as conversions, my bad. Thanks.

 

[SevenUp]

Retired 4/1/23 so 2023 last year I can contribute to a ROTH IRA. 22% bracket this year.
...
2024 income is going to be so low that I will not even need to file taxes....

If you are in the part of the 22% bracket that allows deduction of traditional IRA contributions (or aren't covered by an employer's retirement plan in 2023 so there is no upper income test for deduction), then the situation described in the quote suggests a traditional IRA for 2023 would be best.

 

[badatmath]

If you are in the part of the 22% bracket that allows deduction of traditional IRA contributions (or aren't covered by an employer's retirement plan in 2023 so there is no upper income test for deduction), then the situation described in the quote suggests a traditional IRA for 2023 would be best.

Can't do Traditional by reasons of income/covered by employer plan (pension and 401k). So either move it to Roth or just spend it foolishly to live.

 

[oldtimer]

Can't do Traditional by reasons of income/covered by employer plan (pension and 401k). So either move it to Roth or just spend it foolishly to live.

Don't waste the tax-free space - contribute to your Roth. You are already paying taxes on that amount for this year whether you put in Roth or taxable account or even if you spend it.Of course if you need the money for expenses then leave it in your taxable account.

 

[FlaGator]

Make the contribution.

If I understood correctly, you’ll not pay any taxes this year as-is. Even if you take the same amount out in a year, the earning will be tax free. Probably not much, but still tax free.

 

[Koolau]

Who was it who said "Just do it!"?


Good advice IMHO but always remember and never forget YMMV.

 

[TheWizard]

It almost always makes sense to contribute the maximum to your Roth IRA each year, assuming you are also contributing a hefty amount to your employer's tax-deferred plan.

And the max Roth IRA contribution for older folks this year is $7500, not $7000. So do that if possible.

The more complicated question is what to do about Roth CONVERSIONS once you are retired and no longer have Earned Income...

 

[badatmath]

It almost always makes sense to contribute the maximum to your Roth IRA each year, assuming you are also contributing a hefty amount to your employer's tax-deferred plan.

And the max Roth IRA contribution for older folks this year is $7500, not $7000. So do that if possible.

The more complicated question is what to do about Roth CONVERSIONS once you are retired and no longer have Earned Income...

I got as much shoveled into the 401k as I could manage between when I found I was getting laid off and the end date so nothing more can be done with that.

I will never know about conversions as I can't even manage my measly little finances now. . .

But I will keep trying. Thanks all.

 

[jazz4cash]

I am making Roth contributions baded on DW’s income. I do it to diversify taxwise. A modest Roth account gives me more flexibility to smooth income, pay major expenses, etc. You can withdraw proncipal at any time. I say do it.