Author Topic: Pension>Backdoor Roth>401kRoth>457Roth>now what?  (Read 1399 times)

Livethedream

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Pension>Backdoor Roth>401kRoth>457Roth>now what?
« on: February 13, 2018, 09:19:09 PM »
Looking for suggestions on investment strategy. In two years our house will be paid off and our retirement investment will look like this:

Pension $6,000 (required)
Roth IRA’s $11,000
401k Roth $18,000 (not matched)
457 Roth $18,000 (not matched)

Then what? We’re hoping to have some money left over after that. It appears grandparents are going to have 529’s for our two kids college (3, and 6 month old). We will open them in our name so incase there is extra it can be passed down a generation with not tax implications.

I am 31, spouse is 27. We have 8 paid for rentals, but I work a full time job and have two little ones, so more rentals will not be an option for the foreseeable future.

Planned retirement age is 50 so we will need to bridge that 9 year gap as well.

Looking for suggestions!

JLee

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Re: Pension>Backdoor Roth>401kRoth>457Roth>now what?
« Reply #1 on: February 13, 2018, 09:31:59 PM »

Livethedream

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Re: Pension>Backdoor Roth>401kRoth>457Roth>now what?
« Reply #2 on: February 13, 2018, 10:24:41 PM »
It is quite a bit of Roth, we are still trying to calculate how the new tax laws will benefit us. At this point in time I also worry what taxes are going to look like in 30 years given our country’s national debt crises that at some point will have to correct.

Probably need to run some numbers to see how a traditional might work. We like the added benefit that a Roth will have for inheritance when it comes to required distributions.

Thanks for the link, yeah we have talked about withdrawing our principal as one option. Thinking of investing outside of a designated retirement account for rentals/flips to pursue at retirement.

terran

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Re: Pension>Backdoor Roth>401kRoth>457Roth>now what?
« Reply #3 on: February 13, 2018, 10:36:03 PM »
The 401k and 457 limits are now $18.5k now as of 2018, so there's that.

Have you looked into whether your 401k is capable of a mega backdoor roth? The key ingredients are that it be capable of after-tax contributions and in service in plan rollover to the roth 401k or in service withdrawal which you'd then roll over to a roth IRA.

JLee

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Re: Pension>Backdoor Roth>401kRoth>457Roth>now what?
« Reply #4 on: February 13, 2018, 10:40:35 PM »
It is quite a bit of Roth, we are still trying to calculate how the new tax laws will benefit us. At this point in time I also worry what taxes are going to look like in 30 years given our country’s national debt crises that at some point will have to correct.

Probably need to run some numbers to see how a traditional might work. We like the added benefit that a Roth will have for inheritance when it comes to required distributions.

Thanks for the link, yeah we have talked about withdrawing our principal as one option. Thinking of investing outside of a designated retirement account for rentals/flips to pursue at retirement.

If the national debt becomes a problem that has to be corrected by increased taxes, I don't think that lower tax brackets contain enough income to make an impact.

I'm sure someone with a love for numbers could write up something to illustrate it, but it's too late for that. :P

seattlecyclone

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Re: Pension>Backdoor Roth>401kRoth>457Roth>now what?
« Reply #5 on: February 14, 2018, 01:19:47 AM »
Consider putting at least your 457 in pre-tax. A pre-tax 457 is great in that you can withdraw the money directly from that account at any age; you just pay your regular tax on the withdrawals.  One might assume that a Roth 457 would allow you to pull money out completely free of tax at any age, but that is not correct. Early withdrawals are prorated between principal and growth, and the growth portion is taxed as income.

Fomerly known as something

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Re: Pension>Backdoor Roth>401kRoth>457Roth>now what?
« Reply #6 on: February 14, 2018, 04:23:26 AM »
Regular old taxable account is next.  No limits, you can use it at any time.

Livethedream

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Re: Pension>Backdoor Roth>401kRoth>457Roth>now what?
« Reply #7 on: February 14, 2018, 07:50:51 AM »
Consider putting at least your 457 in pre-tax. A pre-tax 457 is great in that you can withdraw the money directly from that account at any age; you just pay your regular tax on the withdrawals.  One might assume that a Roth 457 would allow you to pull money out completely free of tax at any age, but that is not correct. Early withdrawals are prorated between principal and growth, and the growth portion is taxed as income.

Thanks I forgot that a traditional 457 allowed withdrawals without an age limit.

CorpRaider

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Re: Pension>Backdoor Roth>401kRoth>457Roth>now what?
« Reply #8 on: February 14, 2018, 08:25:37 AM »
Assuming you are married filing jointly, you could do up to $25K per annum in I-Bonds and then slide your allocation in your tax advantaged accounts to take the additional bonds into consideration (or just use them as emergency savings or whatever).  Generally, the interest income is tax deferred until you redeem.  Details are elsewhere on this site or bogle heads, treasury direct, or my blog.
« Last Edit: February 14, 2018, 08:30:52 AM by CorpRaider »

PDXTabs

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Re: Pension>Backdoor Roth>401kRoth>457Roth>now what?
« Reply #9 on: February 14, 2018, 08:28:51 AM »
You could do up to $25K per annum in I-Bonds

I'm just curious how you got to $25K. It's it $10K electronic + $5K paper?

CorpRaider

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Re: Pension>Backdoor Roth>401kRoth>457Roth>now what?
« Reply #10 on: February 14, 2018, 08:32:57 AM »
Yeah, sorry, inferred OP was part of a couple based on post. $10K per person electronic and $5K in paper bonds for a MFJ return, assuming large enough refund, which shouldn't be too hard to generate.
« Last Edit: February 14, 2018, 08:35:39 AM by CorpRaider »

Babybalrog

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Re: Pension>Backdoor Roth>401kRoth>457Roth>now what?
« Reply #11 on: February 15, 2018, 03:22:14 PM »
HSA?

Get a second job, contribute to that 401K

:)

Lan Mandragoran

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Re: Pension>Backdoor Roth>401kRoth>457Roth>now what?
« Reply #12 on: February 16, 2018, 05:53:11 AM »
Uhhh just retire :P. That’s what I’d be doing shortly if I had 8 paid for rentals and a paid for house.

Livethedream

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Re: Pension>Backdoor Roth>401kRoth>457Roth>now what?
« Reply #13 on: February 20, 2018, 10:21:00 PM »
Wish I could do an HSA but my health insurance plan doesn’t qualify.

Think we have decided to do a traditional 457 so I can aim for 45 and have some available funds to use.

Between deducting 18.5k from taxes and new tax brackets it will be almost enough savings to fund one Roth then some.