Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Re: Roth IRA questions
Old 06-15-2006, 09:14 AM   #41
Gumby's Avatar
Join Date: Apr 2006
Posts: 21,866
Re: Roth IRA questions

Why would you want to put after tax money in a 401k?* Wouldn't you have more investment options and less problem cashing out if you just invested it on your own?

I guess if you had exactly the investments you wanted in the 401k and the fees were substantially lower than you could get on your own, it might make sense, but otherwise, I just can't see it.
Living an analog life in the Digital Age.
Gumby 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 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!

Re: Roth IRA questions
Old 06-15-2006, 12:03 PM   #42
Moderator Emeritus
Nords's Avatar
Join Date: Dec 2002
Location: Oahu
Posts: 26,846
Re: Roth IRA questions

Originally Posted by BunsOfVeal
I briefly scanned the fairmark site, but I didn't see anything about rolling over the after-tax portion of a roll-over IRA to a Roth IRA. I have some after-tax money that was rolled from a 401(k) to a roll-over IRA, and it hasn't been 60 days since I left my last job, can I roll the after-tax dollars to a Roth?
Hey, it could be worse. Very few 401(k) owners realize that they have to track the various categories of contributions (employer, employee before-tax, employee after-tax) in their 401(k)s in order to properly calculate an RMD years down the road. If you roll over that 401(k) into your existing IRA then you've added deductible (& possibly non-deductible) contributions to the stew. If you don't know the basis of all these categories then the tax software assumes the highest tax/worst-case scenario.

But you've already learned the answer. You have to roll the 401(k) into a conventional IRA and then convert that conventional IRA to a Roth. Ed Slott even suggests that you go so far as to put EACH CATEGORY of your 401(k) contributions (and their proportional gains) into separate conventional IRA accounts to "simplify" the cost-basis tracking as you pick your way through the conversions.

Ed's approach seems a little extreme to me, especially if you're not planning to have to deal with RMDs. Form 8606 tracks the basis of a conventional IRA and plugs through the process of converting to a Roth. You don't have to be a CPA or a math genius to think through the process, you just have to be able to follow the directions (or to let TurboTax do it for you).

Originally Posted by Gumby
I guess if you had exactly the investments you wanted in the 401k and the fees were substantially lower than you could get on your own, it might make sense...
Exactly. I don't know if you were around when the TSP was finally offered to the military, but we'd all love to be able to make our own after-tax contributions to gargantuan index funds with extremely low turnover and expense ratios of 5-7 basis points.

Co-author (with my daughter) of “Raising Your Money-Savvy Family For Next Generation Financial Independence.”
Author of the book written on "The Military Guide to Financial Independence and Retirement."

I don't spend much time here— please send a PM.
Nords is offline   Reply With Quote


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
Traditional IRA to Roth Conversion Question Dog FIRE and Money 5 03-10-2007 09:53 PM
?? for uber-savers, non-deductible IRA to Roth IRA in 2010 LOL! FIRE and Money 8 12-21-2006 12:25 AM
Roth IRA & Timber Rights/Tree Farm terminator FIRE and Money 6 07-16-2006 03:09 PM
Roth IRA for young adults Sam FIRE and Money 19 06-02-2006 10:14 PM
Not eligible for Roth IRA - conversion? Lusitan FIRE and Money 9 02-23-2006 10:00 AM

» Quick Links

All times are GMT -6. The time now is 02:07 AM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2023, vBulletin Solutions, Inc.