The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: Milkshake on February 24, 2017, 06:28:06 AM
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I am wondering how you handle the Roth conversion ladder as a couple where each person has their own Roth. Do you split the rollover amount to each Roth? Do you just put it all in one and use that is a sort of "primary" Roth? Just trying to understand the more subtle questions about the conversion ladder. Every example I see just mentions it as one Roth, one conversion, with no mention of a spouses Roth.
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Tomato tomato. It doesn't matter as long as you pay the appropriate taxes on the conversion. You can do any of those options. You could put it in a million Roths if you wanted to, one dollar for each Roth. It'd be weird but you could do that in theory.
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Well, I don't have access to a 401k at work, so I have nothing to convert. DH saves for both of us in his 401k, and he'll convert that over time. Our IRAs are Roths, so combined contributions should be good to cover the initial 5 years' expenses. Then the withdrawals will come from DH's conversions.
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I am wondering how you handle the Roth conversion ladder as a couple where each person has their own Roth. Do you split the rollover amount to each Roth? Do you just put it all in one and use that is a sort of "primary" Roth? Just trying to understand the more subtle questions about the conversion ladder. Every example I see just mentions it as one Roth, one conversion, with no mention of a spouses Roth.
Hi Milkshake - like 401(k)s, Roth and Traditional IRAs belong to the individual contributor only during your lifetime. They are not shared assets like regular bank accounts may be. Although you may have multiple accounts to contend with and they may belong accross two individuals, if you are married and filing returns, than you just have to think about them wholistically as a couple but you cannot combine accounts from one spouse with the other. The either belong to individual 1 or 2, but you cannot join them even if you convert between types.
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Tomato tomato. It doesn't matter as long as you pay the appropriate taxes on the conversion. You can do any of those options. You could put it in a million Roths if you wanted to, one dollar for each Roth. It'd be weird but you could do that in theory.
That's what I figured, but I wanted to make sure I wasn't missing something. So when we convert from our 401ks and we have to do two conversions anyway, we'll probably just convert half from my 401k to my Roth IRA, and half from her 401k to her Roth IRA. Same taxes, same net effect, just two conversions per year.
Thanks for the responses.