I gave you a thumbs up on dollar cost averaging not avoiding the longest bull market in history. I sat for years with additional money in a value index waiting for that end of the market to come back. Recently moved into more high dividend and emerging market ETF's. Eventually things have to come back. The idea of avoiding foreign funds was that US exporters covered the international markets anyway (that was a Bogleism), however with the US pulling out of trade deals, I think you have to be in other countries. Think they'll have a higher growth in the next decade. Dollar cost and cover all the bases.
Roth IRA anyone?
- Thread starter parshisa
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Looking harder into my Fidelity stuff. now that I'm retired and coming up on the big 7O, reports from my accounts say the Puritan and the 500 index funds are doing well. I have no clue what these are
Dollar cost averaging is fine, I've done that for years. Just getting out and getting back in is a skill few have. Mostly they can get out in time, but not in on time. My theory on international is that it's taking so long, you mind as well keep your money in US equities, the money you lose being in international could easily be made up by the gains in US equities. Basically international hasn't had a record of beating US equities for a while and if you look at the long term trends they don't have a record of beating US equities so you're just gambling that international is going to pop. And it better pop enough to beat US equities while you've waited in them. I just don't see it popping that much considering the almost 10 point difference in return over the last 10 years.
Yes, a ROTH IRA and Vanguard.
Well, looks like my employment is ending with no decent prospects in foreseeable future (oil and gas sector). With that, I have some 401K savings that I'll need to move. My understanding that 401K can be converted into Roth IRA? how would the funds be taxed? any had to deal with it in the past?
You will pay higher taxes in retirement. Found that out the hard way. I think that 401k's are better than 457's or 403b's which have tons of hidden fees, but a Roth IRA in an index fund is going to be cheaper. Put it in there--target funds based on indexes are great too.
Well I’m you 35 years from now. Funded my Roth religiously from the day Senator Roth got the bill into law.
I’m Now retired with a decent pension, the Roth provides every extra my wants desire, with plenty of leftover for my posterity.
The key is doing it. Vanguard/Fidelity/ even annuities (well, maybe) but consistently contributing is the key. Self managed, professionally managed, ... Just do it. It works. I used an S&P 500 index. Great country America.
Good luck to you. Yeah, eliminate debt and be judicious with your spending. Unwritten rules for financial success.
so, if I'm doing the 401k to roth conversion, from what I'm reading my taxable income for the year will increase by the conversion amount, correct? which means potentially can be pushed into a higher tax bracket and might owe significant chuck of cash at the time taxes are due next year. Am I understanding it correctly? and I guess the amount I'll owe to IRS would have to be paid out of my savings or with actual cash? is there any way IRA funds can be used for that?
btw, I greatly appreciate you guys chiming in with the advise. I'm very new to the whole IRA thing and haven't really ever paid attention to what my 401K was doing, I knew it was there, was contributing to it but never really cared for it. Especially when oil was in triple digits haha. But, THESE day have finally come
If you were my son or daughter, I'd tell you to open an account with etrade or fidelity or robinhood or TD ameritrade...
Doesn't really matter that much. Just use one of the big ones. Put your money into an ETF that tracks the market in general. You can pick and choose other funds/ETFs that might interest you. Just understand that once you put it in the IRA, it's not easy or cheap to take it out. It's set up to save you some taxes and you give up some flexibility. You have to decide what % to put in what category. At 35, I'd recommend all stocks but that is up to you. Typically, stocks are more volatile and people move into safer investments as they get older. I'm at a point in my life where I have enough to retire when it's time. But not much extra. I've gone conservative. You could also gamble with some money on individual stocks in your and not have to worry about the taxes each year.
You pay taxes for the 401K to Roth IRA conversion.... no big deal.
Its a win - win decision that will pay off in the future.
I opened Roth IRAs for my kids when they turned 18, definitely the best first step towards an early retirement.
Yes a Roth Conversion counts as income but you'll never have to pay taxes again. My last year of work I paid $9K, ten years later I'll be paying almost $40K.
That's what I'm actually thinking of doing. With the income being low as it was this year, and throwing in some of that 401k money for conversion it should keep in the same tax bracket and it looks like i won't owe anything on the next year's taxes (kids credit and more taxes paid based on the last year's income).
If I convert all at once I'll owe a bunch in taxes and being out work (for who knows how long) I doubt i'd be willing to give up on a bunch of cash. I certainly need to do more investigation and run the numbers to see what'll make the most sense. this year is getting even better every day
This is the first result from Google:
www.nerdwallet.com
Withdraw some of it in 2020 to pay the taxes on the rest of it you're putting into a Roth IRA.
The CARES act eliminates the 10% penalty. Still, I'd consult with the seller of the Roth IRA how to do it
without paying a lump out of your pocket come April, if that's what your goal is.
401(k) Withdrawals: Rules for Cashing Out a 401(k) - NerdWallet
After age 59 ½, the IRS allows penalty-free withdrawals, and after age 79, requires withdrawals (also known as RMDs, or required minimum distributions). But what if you want to make an early 401(k) withdrawal?
Withdraw some of it in 2020 to pay the taxes on the rest of it you're putting into a Roth IRA.
The CARES act eliminates the 10% penalty. Still, I'd consult with the seller of the Roth IRA how to do it
without paying a lump out of your pocket come April, if that's what your goal is.
I thinks CARES act comes in if you're actually trying to pull the money to use for whatever. I don't believe it has anything to do with the rollovers. But yes, I feel like I'll need a financial advisor to be involved.This is the first result from Google:
401(k) Withdrawals: Rules for Cashing Out a 401(k) - NerdWallet
After age 59 ½, the IRS allows penalty-free withdrawals, and after age 79, requires withdrawals (also known as RMDs, or required minimum distributions). But what if you want to make an early 401(k) withdrawal?
Withdraw some of it in 2020 to pay the taxes on the rest of it you're putting into a Roth IRA.
The CARES act eliminates the 10% penalty. Still, I'd consult with the seller of the Roth IRA how to do it
without paying a lump out of your pocket come April, if that's what your goal is.
I'm also maxing out the annual Roth contribution.
