Author Topic: contributing to ROTH after retirement?  (Read 1422 times)

Crazycarl

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contributing to ROTH after retirement?
« on: July 14, 2016, 07:36:30 AM »
Hoping to get some advice...

I should have about 220-250k in rental properties that I will be able to sell in about 4 years when I start my early retirement. I was going to take this and put it in my taxable Vanguard account and live off it for as long as possible while my ROTH conversion ladder starts.

Does it make sense to still be funding the ROTH with the money from the properties, seeing as that should last me more than 5 years? Would the money from the ladder conversion be considered separate from the money I would put so I can still max out the ROTH?

Would it also be wise to put some into the IRA? Taxes wise it would be a wash, but thinking I can get more into the ROTH to grow tax free that way...

Anyone do something like this?
Thanks!

MichaelB

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Re: contributing to ROTH after retirement?
« Reply #1 on: July 14, 2016, 07:55:58 AM »
You need to have SOME kind of income to contribute to a Roth. I don't know the exact rules for what income qualifies, though. I'm pretty sure dividends and capital gains don't count. I don't know about rental income, though.

However, you only need to have as much income as you contribute--so, if you max out a Roth, you only need to have $5500 of income. So it's not like you need a ton of qualifying income. I'm just not sure about income that doesn't come from a W-2.

Crazycarl

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Re: contributing to ROTH after retirement?
« Reply #2 on: July 14, 2016, 08:17:32 AM »
I was hoping that the dividends, at least from REITs, would qualify as income...

Does it make sense to max out the Traditional IRA then? and then convert it over that way? Would this allow me to reduce my taxes so I can convert more with the ROTH ladder without paying taxes?

I am probably getting to into this way to early...haha





johnny847

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Re: contributing to ROTH after retirement?
« Reply #3 on: July 14, 2016, 08:22:29 AM »
You need to have SOME kind of income to contribute to a Roth. I don't know the exact rules for what income qualifies, though. I'm pretty sure dividends and capital gains don't count. I don't know about rental income, though.

However, you only need to have as much income as you contribute--so, if you max out a Roth, you only need to have $5500 of income. So it's not like you need a ton of qualifying income. I'm just not sure about income that doesn't come from a W-2.

You need earned income to contribute to an IRA period, whether it's traditional or Roth. What's earned income? Here's a list.

https://www.irahelp.com/slottreport/you-must-have-earned-income-contribute-ira

Jim2001

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Re: contributing to ROTH after retirement?
« Reply #4 on: July 14, 2016, 01:24:07 PM »
You need to have SOME kind of income to contribute to a Roth. I don't know the exact rules for what income qualifies, though. I'm pretty sure dividends and capital gains don't count. I don't know about rental income, though.

However, you only need to have as much income as you contribute--so, if you max out a Roth, you only need to have $5500 of income. So it's not like you need a ton of qualifying income. I'm just not sure about income that doesn't come from a W-2.

You need earned income to contribute to an IRA period, whether it's traditional or Roth. What's earned income? Here's a list.

https://www.irahelp.com/slottreport/you-must-have-earned-income-contribute-ira

I think that most people miss the fact that the second box on the right indicates that rental income is not earned income / compensation "unless it is the tax payer's business".  My CPA's guidance is that unless I hold a realtor's license or other credential in that field.  This impacts what can used as deductions to reduce the taxable amount (IRA, standards deduction, etc.).