Brokerage vs Back Door Roth IRA

[joe189man]

we are hoping to retire in our early 50s, late start. to fund these 5-10 years before we can access the 401k, i was thinking we just fund a brokerage to get us through until retirement accounts can be accessed.  A CFP friend is recommending we fund an IRA then convert to roth before funding the brokerage each year, so effectively put $12k a year in these back door roths before we contribute to the brokerage. i think long term there are some tax benefits to the back door roths, but i am not to worried about having money later (post 60) vs having money to cover the gap from 50-60. Am i over thinking this? i know the backdoor roths can be accessed after 5 years. are these IRA conversions still a good idea with this plan?

[Rob_bob]

Remember that Roth contributions can be taken out at any time without a tax penalty. So if you can fund it and a brokerage account I would.  Also Roth withdrawals don't count as income towards ACA or Medicare premiums.

[Telecaster]

we are hoping to retire in our early 50s, late start. to fund these 5-10 years before we can access the 401k, i was thinking we just fund a brokerage to get us through until retirement accounts can be accessed.  A CFP friend is recommending we fund an IRA then convert to roth before funding the brokerage each year, so effectively put $12k a year in these back door roths before we contribute to the brokerage. i think long term there are some tax benefits to the back door roths, but i am not to worried about having money later (post 60) vs having money to cover the gap from 50-60. Am i over thinking this? i know the backdoor roths can be accessed after 5 years. are these IRA conversions still a good idea with this plan?

Yes they are.    Keep in mind these are tough to do unless all of your traditional IRA balances are zero.   

[swashbucklinstache]

A full case study, a template for which is on the forum, would help a lot. Also, check out the investment order sticky. In general, backdoor is probably better than taxable. Just keep in mind the contributions won't adjust for inflation if they're your only bridge funds and you're a meaningful number of years away.

[MDM]

Remember that Roth contributions can be taken out at any time without a tax penalty.

+1

And Conversions, nontaxable portion (aka the amount contributed using the backdoor Roth process) are usually as good as direct contributions.