All things STOCKS

#9,685
#9,685
I’m pleased to have stockpiled the cash rather than immediately deployed it back into equities when I converted a 401k to an IRA. Now should I keep holding the cash or try to catch a bottom?

I’m also debating the Roth conversion option. Taxes are becoming a big issue… but no telling where the administration will attempt to take them.
 
#9,687
#9,687
Thunder Good-Oil said:
I’m pleased to have stockpiled the cash rather than immediately deployed it back into equities when I converted a 401k to an IRA. Now should I keep holding the cash or try to catch a bottom?

I’m also debating the Roth conversion option. Taxes are becoming a big issue… but no telling where the administration will attempt to take them.
Click to expand...
I’m trying to figure out the ROTH conversion numbers also. I’m thinking it makes sense to convert an amount up to the top of the 12% tax bracket, just not sure if it makes sense in the 22% bracket with the market being at an all time high. Maybe if there’s a decent market correction ?
 
#9,688
#9,688
walkenvol said:
I’m trying to figure out the ROTH conversion numbers also. I’m thinking it makes sense to convert an amount up to the top of the 12% tax bracket, just not sure if it makes sense in the 22% bracket with the market being at an all time high. Maybe if there’s a decent market correction ?
Click to expand...

I’m a little over 50% Roth and a bit under 50% tax deferred. I’m not sure if there is an easy answer. But tax rates might could be a lot higher a few years out so I’m leaning hard to converting everything to Roth in the next year or two.
 
#9,690
#9,690
Day traded today with $BZWR. Took it from it;s support around .2145 to .2299. Nice little profit for the day.

Going to attempt to try this method for awhile with extremely tight stop losses. It's worked out well so far.
 
#9,691
#9,691
Thunder Good-Oil said:
I’m a little over 50% Roth and a bit under 50% tax deferred. I’m not sure if there is an easy answer. But tax rates might could be a lot higher a few years out so I’m leaning hard to converting everything to Roth in the next year or two.
Click to expand...
I don’t see the value in converting everything to ROTH if I’m having to give 22%, 24%, or 30% to Uncle Joe. Who knows what the markets will do over the next 10-20 years, but it wouldn’t be too much of a reach for a lot of average folks to be getting a $200,000-$300,000 RMD’s if the markets follow their historical norms. Add that to SS and any pensions and your getting into something pretty high tax brackets.

I’ve been doing a lot of internet reading on the subject and I’ve not stumbled across anything that uses math to back up their opinions
 
#9,692
#9,692
Thunder Good-Oil said:
I’m a little over 50% Roth and a bit under 50% tax deferred. I’m not sure if there is an easy answer. But tax rates might could be a lot higher a few years out so I’m leaning hard to converting everything to Roth in the next year or two.
Click to expand...

For retirement accounts, I'm 38% Roth and 62% Tax Deferred. Biggest driver is current employer only switched to Roth 401k a couple of years ago.

Spouse is 87% Roth and 13% Tax deferred. Biggest driver was sale of significantly appreciated company stock in her Roth, converting old 401k to Roth back in 2009. and she's had Roth 401k much longer than me at current job.

Roth > Tax-Deferred IMO

I think rates will be higher in the future but I don't think substantially enough to convert (with my fact pattern). If you are in the 10 or 12% bracket, then yes, I'd recommend converting
 
#9,693
#9,693
BigOrangeMojo said:
For retirement accounts, I'm 38% Roth and 62% Tax Deferred. Biggest driver is current employer only switched to Roth 401k a couple of years ago.

Spouse is 87% Roth and 13% Tax deferred. Biggest driver was sale of significantly appreciated company stock in her Roth, converting old 401k to Roth back in 2009. and she's had Roth 401k much longer than me at current job.

Roth > Tax-Deferred IMO

I think rates will be higher in the future but I don't think substantially enough to convert (with my fact pattern). If you are in the 10 or 12% bracket, then yes, I'd recommend converting
Click to expand...
Then why haven’t you converted all your tax deferred accounts to ROTHs?
 
#9,694
#9,694
walkenvol said:
Then why haven’t you converted all your tax deferred accounts to ROTHs?
Click to expand...

So myself, I have 4 separate retirment accounts:

Roth IRA (either getting there under normal income rules or backdoor)
401k (Been with current employer for a while and they don't allow in service rollovers at my age)
Rollover 401k (prior employers)
Small SEP/Simple IRA for any Schedule C income

So in my fact pattern, the Roth is already a Roth. Unable to convert 401k. I've converted a portion but not all of the Rollover 401K and the Simple IRA is small (less than 2% of total retirement balance)
 
#9,695
#9,695
walkenvol said:
I don’t see the value in converting everything to ROTH if I’m having to give 22%, 24%, or 30% to Uncle Joe. Who knows what the markets will do over the next 10-20 years, but it wouldn’t be too much of a reach for a lot of average folks to be getting a $200,000-$300,000 RMD’s if the markets follow their historical norms. Add that to SS and any pensions and your getting into something pretty high tax brackets.

I’ve been doing a lot of internet reading on the subject and I’ve not stumbled across anything that uses math to back up their opinions
Click to expand...

Converting now just removes the deferral of the taxes, not the actual taxes. Tax rates will probably be raised in the future. The future gains in the tax deferred plan will be taxed whereas they will not be taxed if they are made as a Roth. The pain is immediate, but the rewards should be substantial in the long run. The case against converting is that current assets will be a smaller base to invest. But counter that with there’s no slam dunk ideas on where to invest cash right now. I’m pretty sure that I will convert, but not how much in 2021, 2022, etc.
 
  • Like
Reactions: mrorange211
#9,696
#9,696
BigOrangeMojo said:
So myself, I have 4 separate retirment accounts:

Roth IRA (either getting there under normal income rules or backdoor)
401k (Been with current employer for a while and they don't allow in service rollovers at my age)
Rollover 401k (prior employers)
Small SEP/Simple IRA for any Schedule C income

So in my fact pattern, the Roth is already a Roth. Unable to convert 401k. I've converted a portion but not all of the Rollover 401K and the Simple IRA is small (less than 2% of total retirement balance)
Click to expand...
Again, if ROTH > tax deferred (not disagreeing with you on this) then why aren’t you converting the tax deferred accounts that are eligible? Trying to determine the mathematical criteria on how much / when to convert.
 
#9,697
#9,697
Thunder Good-Oil said:
Converting now just removes the deferral of the taxes, not the actual taxes. Tax rates will probably be raised in the future. The future gains in the tax deferred plan will be taxed whereas they will not be taxed if they are made as a Roth. The pain is immediate, but the rewards should be substantial in the long run. The case against converting is that current assets will be a smaller base to invest. But counter that with there’s no slam dunk ideas on where to invest cash right now. I’m pretty sure that I will convert, but not how much in 2021, 2022, etc.
Click to expand...
I agree in theory, but I believe there’s always going to be a graduated tax such that the lower incomes pay a lower percentage rate. I’d like to pay taxes on my tax deferred accounts at those lower rates if possible. I’d also like to continue getting the growth off of the eventual dollars that will go towards paying the tax if it makes sense. I don’t think an RMD of $40K or less would put me in a bad tax spot 13+ years down the road which is why keeping some in the tax deferred accounts is logical to me.

With all the retirement help available out there I’m surprised there’s not more quantifiable guidance out there on this topic
 
  • Like
Reactions: mrorange211
#9,700
#9,700
walkenvol said:
I’m trying to figure out the ROTH conversion numbers also. I’m thinking it makes sense to convert an amount up to the top of the 12% tax bracket, just not sure if it makes sense in the 22% bracket with the market being at an all time high. Maybe if there’s a decent market correction ?
Click to expand...

1. I doubt you see tax rates lower than they are now for many years.
2. Money has to be in a Roth for a minimum of 5 years before withdrawals.
3. If you are concerned about stocks going down move the money from money markets. At some point you'll likely want it in something else.
4. If married filing jointly the 22%bracket starts around 80k.

Probably the big question is do you expect to have more income or less when you retire?

Plenty of help on the internet. No one can predict the future though.
 
New posts
You must log in or register to reply here.

VN Store



Back
Top