mtbikelover
Dryer sheet aficionado
- Joined
- Apr 15, 2019
- Messages
- 40
We have been maxing out our traditional 401Ks for years and have accumulated quite a bit of money in them. It's going to hurt us when we have to take RMD's. As we are retiring early (51 and 53), I am planning to pull money out before RMD's are required and we may also do some roth conversions if we are in a low tax bracket in the early years. Plus, I will pull money out for HSA contributions.
That said, I'm thinking we should switch to Roth 401K contributions for the next 4 years. We are in a high tax bracket right now but, based on the RMD calculators, it looks like our income will be about the same (or even more) in retirement.
Thoughts? Should we take the tax hit now or later? Any other ways to reduce RMD's other than get a part time job that has a 401k (not an option for us)?
Here are some numbers if it helps:
RMD at 70.5 would be approx $185,000
SS Income if we wait until 70 would be about $55,000 in today's dollars
We will have a life insurance policy that will pay ~$100k a year for 10 years starting at age 70 (not subject to any taxes)
Current taxable income is $200k which would go to $240,000 if we do Roth 401K.
That said, I'm thinking we should switch to Roth 401K contributions for the next 4 years. We are in a high tax bracket right now but, based on the RMD calculators, it looks like our income will be about the same (or even more) in retirement.
Thoughts? Should we take the tax hit now or later? Any other ways to reduce RMD's other than get a part time job that has a 401k (not an option for us)?
Here are some numbers if it helps:
RMD at 70.5 would be approx $185,000
SS Income if we wait until 70 would be about $55,000 in today's dollars
We will have a life insurance policy that will pay ~$100k a year for 10 years starting at age 70 (not subject to any taxes)
Current taxable income is $200k which would go to $240,000 if we do Roth 401K.