Author Topic: Showing my age!! 401k Question  (Read 2268 times)

Fire2025

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Showing my age!! 401k Question
« on: July 24, 2017, 05:57:50 PM »
Hey all,
Does anyone know where I can find a calculator to help me with the age 70 withdrawals for my 401K.  The reason I ask is my plan is to "retire" at 55.  So I can take money out of my 401k penalty free.  I plan to take $15,000 from 401K.  I will have some "work" as an artist making about $15,000.  And then at 65 or 70, haven't decided yet, I will get my SS of about $18,000.  Just trying to see if it's worth it for me to move my money to the Roth, given the sums and the time horizons.  I'm 47 now.  I will have $325,000 in 401k at FIRE.

Any help is really appreciated.

walkwalkwalk

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Re: Showing my age!! 401k Question
« Reply #1 on: July 24, 2017, 06:25:03 PM »
You would only have to take out about 11k, but you can look up RMD calculators to figure out the exact number you have to take out every year. Probably not worth it in my opinion. Up to you though. This 11k would be the minimum however you stated you would take out 15k. I doubt you're in the 0 percent bracket right now so it wouldn't help you.

MDM

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Re: Showing my age!! 401k Question
« Reply #2 on: July 24, 2017, 11:45:52 PM »
Hey all,
Does anyone know where I can find a calculator to help me with the age 70 withdrawals for my 401K.  The reason I ask is my plan is to "retire" at 55.  So I can take money out of my 401k penalty free.  I plan to take $15,000 from 401K.  I will have some "work" as an artist making about $15,000.  And then at 65 or 70, haven't decided yet, I will get my SS of about $18,000.  Just trying to see if it's worth it for me to move my money to the Roth, given the sums and the time horizons.  I'm 47 now.  I will have $325,000 in 401k at FIRE.

Any help is really appreciated.
Note different y-axis scales in the charts below.

With $15K/yr in Schedule C net income:


With $15K/yr in Schedule C net income and $18K/yr SS income:


Doing tIRA->Roth conversions of ~$30K/yr prior to taking SS is well worth considering.

You can use the case study spreadsheet for other scenarios.

Fire2025

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Re: Showing my age!! 401k Question
« Reply #3 on: July 25, 2017, 09:36:59 AM »
Thank you so much.  I really appreciate the help.  That makes great sense.  I'll work on a strategy. 

seattlecyclone

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Re: Showing my age!! 401k Question
« Reply #4 on: July 25, 2017, 11:50:46 AM »
I think it can make sense to do Roth conversions up to the top of whatever tax bracket you're already in, so long as it doesn't push your projected future income into an even lower tax bracket. You'll have to do some guesses for your own situation to see what makes sense for you.

Fire2025

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Re: Showing my age!! 401k Question
« Reply #5 on: July 25, 2017, 02:55:32 PM »
I'm going to see if I can figure out a spreadsheet to work out the income/tax savings stuff.  I also need to figure out if the amount I want and the amount I have to take are equal, when do the tax savings of the Roth and the tax event of the conversion meet, merge and/ or cross over. 

I'm more of an art person than a math person, so I was hoping there was a simple, "oh no you should definitely do this" answer. Oh well, math it is!!!

MDM

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Re: Showing my age!! 401k Question
« Reply #6 on: July 25, 2017, 05:08:10 PM »
I'm going to see if I can figure out a spreadsheet to work out the income/tax savings stuff.
Feel free to use the case study spreadsheet tax calculations as a starting point for your own financial situation.

Fire2025

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Re: Showing my age!! 401k Question
« Reply #7 on: July 25, 2017, 05:50:13 PM »
I'm going to see if I can figure out a spreadsheet to work out the income/tax savings stuff.
Feel free to use the case study spreadsheet tax calculations as a starting point for your own financial situation.
Thanks I'll need the help.  HaHa!!!

Lobo

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Re: Showing my age!! 401k Question
« Reply #8 on: July 27, 2017, 01:43:19 AM »
What exactly would you be trying to accomplish by moving money to a Roth?  There are a number of different reasons that people do Roth conversions - I'm not clear on what your reason is?

Fire2025

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Re: Showing my age!! 401k Question
« Reply #9 on: July 27, 2017, 08:07:12 AM »
What exactly would you be trying to accomplish by moving money to a Roth?  There are a number of different reasons that people do Roth conversions - I'm not clear on what your reason is?

To avoid the mandatory withdrawals in my 70s, if the math says that's a good idea.  And to take advantage of any tax advantages of the Roth, if the math says there are any.  At least that's my low level thinking, just have to spend the time dealing with the math now. 

I'm an artist, can't I just create something that represents math?  No? Oh well, math it is.