The Mustache Tax Guide (U.S. Version)

[Radioherd88]

Roth contributions are withdrawable at any time, for any reason, without tax or penalty.

Yes, Roth earnings withdrawn prior to age 59.5 may be liable for both tax and penalty.

Ok thanks yes that was my initial clarifying question -

How exactly do you report whats a contribution and what's earnings in 10 year's time then? Each year you report your IRA base and then as long as you don't withdraw more than that before 59.5 it's never taxed?

E.g - I contribute the max of $11, 000 a year (for both spouse and I) for 10 years = I can withdraw $110, 000 before 59.5 without penalty or tax attached?

To get me to 59.5 I can also do the conversion ladder with a 401k/403B, and I can also use my 457b if i leave my employer (as you can use this penalty free before 59.5?

[MDM]

How exactly do you report whats a contribution and what's earnings in 10 year's time then? Each year you report your IRA base and then as long as you don't withdraw more than that before 59.5 it's never taxed?

See part III of Form 8606 and the instructions for it.

E.g - I contribute the max of $11, 000 a year (for both spouse and I) for 10 years = I can withdraw $110, 000 before 59.5 without penalty or tax attached?

To get me to 59.5 I can also do the conversion ladder with a 401k/403B, and I can also use my 457b if i leave my employer (as you can use this penalty free before 59.5?

Yes and yes.

[lifeisshort123]

It would be great to have this post edited in light of the current tax code.  It is still highly useful and informative, though personal exemptions, I believe, do not exist anymore.

[Cheddar Stacker]

It would be great to have this post edited in light of the current tax code.  It is still highly useful and informative, though personal exemptions, I believe, do not exist anymore.

That would be wonderful.  Were you volunteering  or looking to voluntold that task to someone?

It's true a lot has changed. But the meat is roughly the same. I will be going through a big transition soon with my work responsibilities.  Perhaps I can give it a try later this year. Stay tuned, but don't hold your breath. I have not yet begun to procrastinate.

[simonsez]

Roth 401k accounts no longer having RMDs in 2024 and beyond could change the retirement/estate-planning calculus for some.

https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs
"Designated Roth accounts in a 401(k) or 403(b) plan are subject to the RMD rules for 2022 and 2023. However, for 2024 and later years, RMDs are no longer required from designated Roth accounts."

[dandarc]

Roth 401k accounts no longer having RMDs in 2024 and beyond could change the retirement/estate-planning calculus for some.

https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs
"Designated Roth accounts in a 401(k) or 403(b) plan are subject to the RMD rules for 2022 and 2023. However, for 2024 and later years, RMDs are no longer required from designated Roth accounts."

The group impacted by this has to be quite small, no? Because the standard play has long been to simply move any Roth 401k or similar to a Roth IRA at separation (or earlier if your plan allows it) to avoid RMDs at least until the death of the account owner as well as to get more favorable treatment of any non-qualified withdrawals.

[simonsez]

Roth 401k accounts no longer having RMDs in 2024 and beyond could change the retirement/estate-planning calculus for some.

https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs
"Designated Roth accounts in a 401(k) or 403(b) plan are subject to the RMD rules for 2022 and 2023. However, for 2024 and later years, RMDs are no longer required from designated Roth accounts."

The group impacted by this has to be quite small, no? Because the standard play has long been to simply move any Roth 401k or similar to a Roth IRA at separation (or earlier if your plan allows it) to avoid RMDs at least until the death of the account owner as well as to get more favorable treatment of any non-qualified withdrawals.

Probably.  This would have affected me a few years ago.  As a fed, the TSP had some proportional withdrawal rules that they only recently got rid of.  I.e. You couldn't pick only your traditional or Roth dollars to move, you could only move in accordance with the %.  E.g. If your TSP balance was 70% traditional and 30% Roth, any withdrawal would have to be in that proportion.  Once they changed the rules, then yes, I would've been on the "Roth 401k/TSP to Roth IRA at separation" train due to the Roth 401k RMDs that kicked in at 70 1/2 (now 73).  But now I guess I'm happy to have the option to remain in TSP with my Roth dollars if I should desire.  Hard to beat those fees since people who separate before they're vested help keep the costs down.

Also, I think this forum is more educated than the average person with regard to personal finance.  I'm sure there are many people who don't have a clue about RMDs and would never perform a rollover and just leave funds sitting there.  Now those people won't get a forced distribution at 73 (assuming they had Roth TSP dollars in the first place - it requires manually changing as the default is traditional).

Anyway, just wanted to put it out there.