The Roth IRA loophole discussed in this post is intriguing to me. Hoping someone can share first-hand experience using this method.
Some specific questions/concerns on it:
- Are there any snags or downsides not mentioned in the post?
- If it's a loophole now, couldn't the government change it (close the loophole) in the future?
- Does this method work with IRA --> Roth rollovers as well or just 401K?
http://www.mrmoneymustache.com/2011/11/11/how-much-is-too-much-in-your-401k/"
Build up your 401k and any other savings, then quit your job to begin retirement – hooray!
You are now in a low tax bracket – you can actually roll over a chunk of your 401k into a Roth IRA account and pay income taxes on it at this point.
Then you let it sit in the Roth IRA for a minimum of 5 years
At this point, you can withdraw all of the principal (but not the gains yet, no big deal), penalty-free!
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