Gunfighter

Not necessarily. You can enter a PCS swap request for a Q trip. It will only be honored if the trip you are dropping meets PD criteria. You don't have to use a PD first. If your dropped trip doesn't meet PD, criteria, you can submit an APD or IVD and then WS the Q trip.

Drone

Techique only: I put as much of my contribution in the 401k(a) part. It is a post tax account. I have opened up a Roth IRA with in Fidelity and at the end of the year rollover all my 401k(a) money into my Roth IRA. Two things: 1. its allowed under our Fidelity Rules, 2. Now as a Roth IRA there are no Required Minimum Distributions. Very simple.

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.

Drone

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.

crewdawg

I've done the same as Drone. If you have a Roth IRA elsewhere, you can opt to put your 401(a) in that Roth IRA. The catch is they have to mail you a check, then you send it to wherever your Roth IRA is managed. I didn't want to deal with this, so I just opened another Roth IRA with Fidelity. This way I just make a phone call and it's done within minutes. They will move it over into the Fidelity Roth IRA and it processes by the next business day.

Theoretically, you could contribute up to the 56k max for 2019. Since the company contributions are counted in that 56k, in practice you can't quite contribute that much. I just make a best guess as to what the company will put into my DPSP then set my percentage contribution to get as close to the max as possible. I generally just put all my PS check into 401 after tax.

It's really up to you to decide if you think it will work out better for you in the long run. One nice thing about the Roth IRA is lack of RMDs. One of the big reasons I do this is actually to pump up my Roth IRA. Plan being to convert it to a Self Directed IRA later and use that to invest in more real estate/rental properties.

No worries, it's confusing and it took me a lot of reading and chatting with a CPA friend of mine to wrap my mind around it all. I commend you for these efforts and I wish you and yours the best.

Gunfighter

If you do not intend to contribute more than 25k into Roth accounts, the Roth 401k would be an option for the first 19k. If you are investing primarily in mutual funds, many of the funds within the Delta Plan have lower fees than their counterparts outside of the plan. You can roll the Roth 401k over to a Roth IRA at retirement to avoid the RMDs. The Roth IRA must be open for 5 years before taking funds out, so you could start a backdoor Roth IRA of $6k per year in addition to the Delta Plan and then roll over your Roth 401k at retirement. The rollover funds would pass the 5 year test if the Roth IRA has been open for 5 years.

DYODD, YMMV, get some real advice or at least spend some time on google.

full of luv

The main "unknown" in all this planning is if/when the politics / "needs" of the US change to the point where the Roth IRA is considered a free ride that the wealthy enjoy in retirement that many were not able to afford and therefore should now be taxed as a wealth tax or an asset tax.

Unfortunately, I envision a day in the not too distant where it is actually considered more "fair" to take from people with Roth IRA's because those who used the Roth were obviously more well off than those using the other "pre-tax" IRA vehicles.
Good luck to us all.....

sailingfun

I would also not consider required minimum distributions after 70 a big deal. If your not going to take distributions what is the point of saving the money in the first place.

Drone

I didn't imply I would not need it. In theory, trying to control it. Just trying to manipulate the amount of income per year to stay in lower tax brackets.

As Full of Love stated, it could all change, but got to play by the known rules of the times.

sailingfun

I don’t see major changes in either Roth or regular 401k accounts. The government is not going to start confiscating personal accounts. The worst I see happening is taxes on gains and I doubt even that happens. Anytime one crackpot politician suggests something regarding retirement accounts the internet jumps all over it. Kind of like how Obama was going to seize everyone’s guns if he got elected.