Help me choose Plan A or Plan B!

[miss blueberry]

Hello Mustachians,

I have recently been working to consolidate my pieces-n-parts investment accounts into a single Vanguard account for ease of monitoring, among other considerations.  The Vanguard account is set up as a Roth IRA.  I have some rollover funds from an Oppenheimer fund coming (this was a regular IRA).  Here are my options:

(1)  Plan A:  Put these funds into the Roth account and then pay the taxes (the rollover amount is $18,000) to keep the single account theme going, OR...

(2)  Plan B:  Put these funds into a separate Vanguard account (NOT a Roth).  The benefit here would be ease of access (not having to wait until 59.5 to withdraw as we hope to retire when hubby reaches 58).  For the 1.5 years until we can begin our IRA withdrawls, we need a small cushion.  I also have about a $24000/year pension that will be in place at this time.

What would YOU do??  Thanks, gang!

[lentilman]

Can you structure the conversion to slowly convert to a Roth to avoid paying taxes? 

[alanwbaker]

I have some rollover funds from an Oppenheimer fund coming (this was a regular IRA). 

(2)  Plan B:  Put these funds into a separate Vanguard account (NOT a Roth).  The benefit here would be ease of access (not having to wait until 59.5 to withdraw as we hope to retire when hubby reaches 58). 

Hi Miss Blueberry,

Is the Vanguard account in plan B a traditional IRA?  You would not want to move tax-advantaged funds into a taxable account.

[miss blueberry]

I haven't actually opened the Plan B account yet... that's sort of my underlying question.  What type of account would I open that would allow access BEFORE 59 1/2 without penalty?  We will need approx two years of living expenses available before we reach 59 1/2 so I'd want to be able to get to that $$.  Thanks for your response(s)!

[alanwbaker]

I haven't actually opened the Plan B account yet... that's sort of my underlying question.  What type of account would I open that would allow access BEFORE 59 1/2 without penalty?  We will need approx two years of living expenses available before we reach 59 1/2 so I'd want to be able to get to that $$.  Thanks for your response(s)!

Sorry, Miss Blueberry, but you can't make early withdrawals from a tax-advantaged account without tax disadvantages.

[arebelspy]

I haven't actually opened the Plan B account yet... that's sort of my underlying question.  What type of account would I open that would allow access BEFORE 59 1/2 without penalty?  We will need approx two years of living expenses available before we reach 59 1/2 so I'd want to be able to get to that $$.  Thanks for your response(s)!

Sorry, Miss Blueberry, but you can't make early withdrawals from a tax-advantaged account without tax disadvantages.

If she can do a rollover to Roth with low enough income to avoid the taxes and have it season 5 years, she sure can.

Google "backdoor roth".