Relaxed Cajun
Confused about dryer sheets
- Joined
- Jun 12, 2010
- Messages
- 9
Background info:
Married, wife pregnant with one child
Ages 35, 33
Income: Joint gross for 2012 $306,000
Goals: Be able to retire in 50s (15-20 years)
Current Savings (only been working 1 year) - Emergency Fund $25,000; traditional IRA $23,000; 401K $35,000; Taxable Account $7000
Currently saving: $100,700/year ($17500 401K contribution, $5200 employer match, and $78,000 taxable account)
Debt:
Interest free mortgage (you read that right, parents loaned us the money interest free!) $304,000 - make biweekly payments of $1300, will be payed off in 9 years (I know it's interest free but hate debt)
Student loan: $30,000 - plan to pay off over next 9 years
Investments Mix: Right now, pretty basic as I do not know a lot; 401K is 100% S&P index fund; taxable is 100% VTWSX, and IRA is 100% VTWSX. Basic plan is to pour money into these until debt-free (9 years) and then start allocating to bond funds for a more suitable retirement mix.
Questions:
I have been considering converting my IRA to a roth IRA, then opening up a IRA for my wife, and then doing a backdoor Roth Conversion for each of us each year starting in 2013.
Do I have to pay taxes on the 23,000 in my IRA as soon as I convert it?
Any reason not to do the conversion? From my reading it seems like a no brainer since I do not have a lot in the IRA now.
Married, wife pregnant with one child
Ages 35, 33
Income: Joint gross for 2012 $306,000
Goals: Be able to retire in 50s (15-20 years)
Current Savings (only been working 1 year) - Emergency Fund $25,000; traditional IRA $23,000; 401K $35,000; Taxable Account $7000
Currently saving: $100,700/year ($17500 401K contribution, $5200 employer match, and $78,000 taxable account)
Debt:
Interest free mortgage (you read that right, parents loaned us the money interest free!) $304,000 - make biweekly payments of $1300, will be payed off in 9 years (I know it's interest free but hate debt)
Student loan: $30,000 - plan to pay off over next 9 years
Investments Mix: Right now, pretty basic as I do not know a lot; 401K is 100% S&P index fund; taxable is 100% VTWSX, and IRA is 100% VTWSX. Basic plan is to pour money into these until debt-free (9 years) and then start allocating to bond funds for a more suitable retirement mix.
Questions:
I have been considering converting my IRA to a roth IRA, then opening up a IRA for my wife, and then doing a backdoor Roth Conversion for each of us each year starting in 2013.
Do I have to pay taxes on the 23,000 in my IRA as soon as I convert it?
Any reason not to do the conversion? From my reading it seems like a no brainer since I do not have a lot in the IRA now.