Older Americans who live in RVs and drive from one low-wage job to another

Re:Older Americans who live in RVs and drive from one low-wa... by stevenwoo on Saturday November 11, 2017 @06:02PM (#15678684)

Roll all of your 401K's over into a single Roth IRA. I lost track of one for years until I went to work for another company that had a 401K with the same firm as my previous employer. It's easier to keep track of and mentally manage and last time I was in a 401K you are limited to a specific hand picked set of funds that may or may not be that great. Invest the Roth IRA 100% into index or age specific target retirement funds, off the top of my head there's a Vanguard 2040 or 2045 fund or equivalent at other mutual fund companies.

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Re:Older Americans who live in RVs and drive from one low-wa... by otoburb on Saturday November 11, 2017 @06:26PM (#15678755)

>>Roll all of your 401K's over into a single Roth IRA.

In the US, Roth contributions are made with "after-tax dollars", while 401K contributions are generally made with "pre-tax dollars", so if you rollover the 401K into a Roth, the IRS will see the rollover (aka "conversion") as a bump in your income and ask you to pay tax on the rollover amount, with the remainder/net going to the Roth IRA.

I still think a Roth conversion is a good idea for self-directed investments, but folks should be aware of the incoming tax bill.

[1] https://www.investopedia.com/articles/retirement/09/roth-401...

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Re:Older Americans who live in RVs and drive from one low-wa... by tavert on Saturday November 11, 2017 @11:53PM (#15679721)

You can pay the tax bill separately, which is a better move than letting it come out of the rollover amount if you have cash to afford it.

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Re:Older Americans who live in RVs and drive from one low-wa... by hiram112 on Sunday November 12, 2017 @04:53AM (#15680343)

I still don't understand why you'd convert to Roth.

My tax rate will be higher while I'm working and earning a salary than they will when I'm retired.

Also, by keeping the base amount higher (pre tax), won't I have more growth than compared to the after-tax amount?

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Re:Older Americans who live in RVs and drive from one low-wa... by tavert on Sunday November 12, 2017 @04:10PM (#15682648)

It'll be more absolute dollar value of growth, but wouldn't be higher in percentage, and taxes are going to come out as some percentage of any money that was put in pre-tax at the time you withdraw.

If you didn't work the entire year or your income was otherwise variable (bonuses or whatever other reason) then it makes more sense than usual to do roth contributions, or rollovers/recharacterization from traditional to roth, in lower-income years. Assuming you can afford to, and want to maximize what you put into tax-advantaged accounts.

The annual contribution limits are also on dollar amount that goes into the account, so if you're maxing out then you can get more out of a roth ira/401k overall. Not all companies offer the choice of roth on their 401k plans, which is a little annoying.

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Re:Older Americans who live in RVs and drive from one low-wa... by gameshot911 on Sunday November 12, 2017 @10:07AM (#15681087)

One reason for Roth would be if you think tax rates will be higher when you retire.

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