Originally Posted by
Big E 757
I’ve been reading a lot of stuff from our more financially savvy guys about this, but you’re the first person I’ve read who actually described what exactly you’re doing...
So you just open a stand alone Roth IRA with Fidelity, and then have it linked(?) to the other retirement accounts, and then at the end of the year, have all the 401(a) money rolled into the Roth IRA? Is this better than just directing your personal contributions into a Roth 401(k)? I’m guessing you’re able to get around the $19,000 personal contribution limit? Because the money isn’t tax deferred?
I’m sorry guys, I know some of you have been covering this for years but I finally am in a position to start maximizing my retirement savings, so I haven’t really asked these questions until now. I’ve been caring for a sick/dying parent and also have a daughter with special needs. I have dug out of a large financial burden recently and need to get back on track with my own future.
Thanks for any and all (helpful) responses.
To answer, yea that is exactly what I do. Is it any better? It is the same action, however, because the money is now in a Roth IRA, it will not be subject to RMD like 401k money becomes at age 70. The 401k Roth is still in the 401k plan (earnings are still tax free as its Roth money), but you will be required to take distributions unlike the IRA. I like the freedom of determining when and how much of my Roth money to cash in as I will use it to offset taxable income. The hope is I can lower my tax bracket on retirement income.