Author Topic: New To Investing Thread  (Read 327214 times)

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Offline catastrophe

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Re: New To Investing Thread
« Reply #2000 on: February 03, 2018, 10:13:21 AM »
if you're making enough money that you're not eligible for a tax advantaged IRA, you probably don't want to deposit into a roth.

Probably should have requested an explanation before pulling the trigger, but for posterity’s sake can you explain?

I can’t think of any reason you would want a traditional IRA over a Roth, especially if (like me) all the contributions were after tax anyway.

Offline sys

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Re: New To Investing Thread
« Reply #2001 on: February 03, 2018, 10:59:44 AM »
yeah, if they are all after-tax, then roth them, it doesn't matter, other than the roth is cleaner.

logic is/was that if you're in a high marginal rate now, you don't want to save/convert to after-tax now.  put as much as you can in pre-tax savings and convert in some year when you have a low marginal rate.
"experienced commanders will simply be smeared and will actually go to the meat."

Offline catastrophe

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New To Investing Thread
« Reply #2002 on: February 03, 2018, 02:47:29 PM »
Here is my understanding of how it works. Let me know if I’m wrong:

Regular IRA (post tax): money grows tax deferred. Gains still taxed on withdrawal.

Roth IRA: grows tax free and no taxes on withdrawal.

I’m still confused what happens when you convert a post tax IRA to Roth. I already have a 401k so I don’t think pre-tax IRA is even an option. But I thought if I convert a post tax IRA then the gains would be taxable (hence better to do it sooner rather than later).

Offline sys

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Re: New To Investing Thread
« Reply #2003 on: February 03, 2018, 03:26:57 PM »
pre tax money isn't taxed on contribution, is taxed on withdrawal.  after tax is taxed in the year of contribution, isn't taxed on withdrawal.  roth is 100% after tax, so you can access that category of funds selectively.  in a traditional, if you have some after tax and some pre tax, any withdrawal is taxed on the % of each, you can't choose to withdraw one or the other selectively.


this is all afaik, i've never made any nondeductible contributions to a traditional, so i've never looked into the details much.
"experienced commanders will simply be smeared and will actually go to the meat."

Offline sys

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Re: New To Investing Thread
« Reply #2004 on: February 03, 2018, 03:38:51 PM »
looked it up, you were right, i was wrong.  nondeductible in a traditional is still taxed on withdrawal

btw, your ira contribution limit isn't dependent on your 401k contributions (assuming you're an employee and have a work-sponsored plan), it's based on your income.
"experienced commanders will simply be smeared and will actually go to the meat."

Offline catastrophe

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Re: New To Investing Thread
« Reply #2005 on: February 03, 2018, 08:55:35 PM »
:cheers:

Offline mocat

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Re: New To Investing Thread
« Reply #2006 on: February 03, 2018, 09:20:25 PM »
I have half my 401k post and the other half pre tax, am I stupid or something

Offline catastrophe

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Re: New To Investing Thread
« Reply #2007 on: February 03, 2018, 09:33:25 PM »
Roth 401k is still pretty boss. Generally though the idea is if you are in a higher tax bracket than you plan to be in retirement (most people are) then you’re better off taking as much pretax benefits as possible.

My employer offers pretax 401k up to the 18,000 limit and then post tax after that. I recently read the post tax 401k is great because if/when you switch jobs it can be rolled into a Roth IRA.

Offline steve dave

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Re: New To Investing Thread
« Reply #2008 on: February 04, 2018, 10:55:52 AM »
I have half my 401k post and the other half pre tax, am I stupid or something

I did all roth 401k (post) when I wasn't making crap and mrs. dave was a full time student. Later I switched.

Offline ben ji

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Offline sys

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"experienced commanders will simply be smeared and will actually go to the meat."

Offline steve dave

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Offline catastrophe

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Re: New To Investing Thread
« Reply #2012 on: July 19, 2018, 01:57:58 PM »
Congrats everyone! :cheers:

I did this for the first time this year. It was never specifically barred under the law (which is why everyone was doing it), but there were plenty of questions as to whether the IRS could treat backdoor rollovers under the doctrine that you can’t use otherwise legal steps to reach an illegal result (i.e., contributing to a Roth when you are over the income limit).

Offline Phil Titola

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Re: New To Investing Thread
« Reply #2013 on: July 19, 2018, 02:45:14 PM »
https://www.forbes.com/sites/jeffreylevine/2018/07/13/irs-unlocks-the-door-for-high-income-savers/#17ac4122326c

i didn't realize it was a questionable thing.

I've been doing this for years
Did you move all your old IRAs into 401k so when you do the backdoor you don't have to deal with the entire IRA (which I believe is supposed to be all of them you own) making any money ....or just move it ASAP.

Offline catastrophe

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Re: New To Investing Thread
« Reply #2014 on: July 19, 2018, 02:57:50 PM »
You can just dump regular IRA funds into a Roth. I’m not sure why you wouldn’t want to do all of it. Regular IRAs aren’t that great.

Offline sys

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Re: New To Investing Thread
« Reply #2015 on: July 19, 2018, 03:02:26 PM »
You can just dump regular IRA funds into a Roth. I’m not sure why you wouldn’t want to do all of it. Regular IRAs aren’t that great.

if you want to space it out for taxes.
"experienced commanders will simply be smeared and will actually go to the meat."

Offline catastrophe

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Re: New To Investing Thread
« Reply #2016 on: July 19, 2018, 03:14:59 PM »
That’s over my head. What’s the tax impact? I didn’t see any.

Edit: just realizing this may be repeating a conversation we had earlier.  I assume it makes a difference if your regular IRA contributions were pretax?
« Last Edit: July 19, 2018, 03:28:27 PM by catastrophe »

Offline Phil Titola

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Re: New To Investing Thread
« Reply #2017 on: July 19, 2018, 03:33:35 PM »
That's how I took it...guess you could always bite the bullet now on traditional IRA and hedge higher tax bracket in the future.
That’s over my head. What’s the tax impact? I didn’t see any.

Edit: just realizing this may be repeating a conversation we had earlier.  I assume it makes a difference if your regular IRA contributions were pretax?

Offline sys

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Re: New To Investing Thread
« Reply #2018 on: July 19, 2018, 03:59:19 PM »
yeah, i assumed we were talking pretax.  so you want to time your tax impact on conversions.
"experienced commanders will simply be smeared and will actually go to the meat."

Offline catastrophe

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Re: New To Investing Thread
« Reply #2019 on: July 19, 2018, 04:01:56 PM »
Makes sense to spread it out if you can to avoid a higher tax bracket (if you can, I have no idea). If you’re young though I gotta think it’s worth biting the bullet almost every time since all earnings in a Roth are tax free while in a traditional IRA they are only tax deferred.

Offline steve dave

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Re: New To Investing Thread
« Reply #2020 on: July 19, 2018, 07:07:38 PM »
https://www.forbes.com/sites/jeffreylevine/2018/07/13/irs-unlocks-the-door-for-high-income-savers/#17ac4122326c

i didn't realize it was a questionable thing.

I've been doing this for years
Did you move all your old IRAs into 401k so when you do the backdoor you don't have to deal with the entire IRA (which I believe is supposed to be all of them you own) making any money ....or just move it ASAP.

I had no old IRAs prior to. Only started once maxed on 401ks. Do a lump some deposit and transfer immediately.


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Offline Phil Titola

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Re: New To Investing Thread
« Reply #2021 on: July 19, 2018, 09:36:15 PM »
I had moved all my old 401k into IRAs....prob should just move to current company 401k

Offline catastrophe

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Re: New To Investing Thread
« Reply #2022 on: July 19, 2018, 10:22:35 PM »
Ok, now I'm up to speed.  Are you sure you can even roll over part of a 401k into an IRA? It seems like that could be even more difficult since 401k is tied to your job?

Offline Phil Titola

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Re: New To Investing Thread
« Reply #2023 on: July 19, 2018, 10:44:23 PM »
Ok, now I'm up to speed.  Are you sure you can even roll over part of a 401k into an IRA? It seems like that could be even more difficult since 401k is tied to your job?
After I left that old job. Easy peasy.... Kind of bad for backdoor rothing though

Offline steve dave

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Re: New To Investing Thread
« Reply #2024 on: July 19, 2018, 10:46:27 PM »
Ok, now I'm up to speed.  Are you sure you can even roll over part of a 401k into an IRA? It seems like that could be even more difficult since 401k is tied to your job?

it's easy. but you don't need to. unless the 401k provider sucks.