I recently adjusted my Roth IRA to 50% in SCHD, 25% in SCHX, and 25% in SCHG. For my Roth 401k, I went with 70% in Vanguard's S&P 500 Index, 20% in the Vanguard Growth Index, and 10% in the Vanguard International Index. My goal is to grow my $350k to over $1 million within the next three years.
I agree-having an advisor manage my investments has been invaluable since my work schedule doesn't allow time for in-depth analysis. Thankfully, my portfolio has grown fivefold in just four years, reaching nearly $1 million today.
@@CarddtReddt I work with Rebecca Lynne Buie. At first, I was hesitant to let someone else handle my investments, but it turned out to be the best decision I’ve made.
Thank you for sharing! I did a quick search for Rebecca Lynne Buie online, found her consulting page, and scheduled a call. She seems to have a high level of expertise.
My company paid a consultant to provide retirement classes when I was 24 and just started saving for retirement. The class was called "The Kids Table" and basically their advice was go with a target retirement fund that aligned with your 65th birthday. That was 20 years ago. It is the only thing I've ever invested in. How else can I grow my finance?
target date funds made me a multimillionaire but i also watched them drop 40% in a very short time and take a long time to recover. my best suggestion is that you seek the guidance of a seasoned advisor to avoid mistakes
When it comes to ‘’personal’’ finance/retirement planning, following the steps of a seasoned advisor did the trick for me in just 5 years. Helped turn my capital into a whooping 6 figure yearly returns. If you want to keep it very safe, then Vanguard TDF may be for you.
I've stuck with SOPHIE LYNN CARRABUS since the pandemic, and her performance has been consistently impressive. She’s quite known in her field with over two decades of experience, simply look her up.
thanks for the lead, curiously searched Sophie by her full name, easily spotted her consulting page and was able to schedule a call session, she seems highly professional from her resumé
At 32, I'm diving into investing for the first time. I’ve started contributing to my 401K and opened a Roth IRA with automatic contributions. My main question is whether asset allocation is crucial at this stage or if I'm just overthinking as a beginner.
I completely agree-having a professional manage my investments has been invaluable. My job doesn’t allow time for in-depth stock analysis, so I entrusted an advisor with my portfolio. I’ve been fully invested since the COVID-19 outbreak, and I’m happy to say my portfolio has grown fivefold in just five years, reaching nearly $1 million.
Impressive gains! Who's guiding your investments? I’m excited to invest for my future retirement, but I'm unsure where to begin. Currently, I’m only contributing to my 401K through my employer, but the returns have been slow.
Rebecca Lynne Buie has consistently been my top recommendation. She’s widely recognized for her expertise in financial markets and has a strong track record. I highly recommend her.
Thank you for the recommendation. I was curious, so I looked up Rebecca Lynne Buie online. Her consulting page came up at the top, and I’ve scheduled a call. I've heard about advisors before, but none have looked as impressive as she does.
Investing in Roth IRA can be a good choice since they are funded with after tax dollars, your contributions can grow tax-free over time. When you withdraw money from your Roth IRA in retirement, you won’t have to pay tax on it, which will help you keep more of your hard-earned money. I retired with 5 million dollars
If you’re new to investing or have a more complex financial situation, It can be helpful to work with a financial advisor who can provide personalized guidance and help you make informed investment decisions.
On the contrary, even if you’re not skilled, it is still possible to hire one. I am a project manager and my personal port-folio of approximately $750k took a big hit in April due to the crash. I quickly got in touch with a financial-planner that devised a defensive strategy to protect and profit from my port-folio this red season. I’ve made over $150k since then
Finding financial advisors like “Sonya Lee Mitchell” who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
Dividend investing is my jam! I'm building wealth with a buy-and-hold strategy in my Roth account, featuring rockstars like Berkshire B stock, SCHD, and S&P 500 and total market ETFs. My taxable account is also getting in on the action, generating regular income through dividend-paying stocks. It's a winning combo that's helping me achieve my financial dreams!
The best strategy depends on your financial situation, account types, tax bracket, and investment goals. Consult a financial advisor or tax professional to tailor these strategies for maximum tax efficiency.
My advisor helped me rebalance my $2m portfolio without triggering capital gains taxes by using tax-advantaged accounts and reallocating dividends and new contributions. They also recommended tax-loss harvesting and strategies to stay within my tax bracket. Q2 taxable divs this year was $17,388 thanks to her guidance. I maintained my desired asset allocation while minimmising taxes.
Glad to stumble on this commentary, I've been getting suggestions to use one, but where and how to find one has been challenging, Can i reach out to the one you use?
I'm cautious about giving specific recommendations since this is an online forum and everyone situation is unique, but I've worked with Jarrod Gabriel Sandra for years and highly recommend her. Look her up to see if she meets your criteria
Investing in a Roth IRA is a smart choice because contributions grow tax-free over time, and withdrawals in retirement are tax-free. This allows you to keep more of your hard-earned money. Starting early maximizes the benefits of compounding, where your investment grows exponentially by earning interest on both the initial amount and the interest it accrues.
Effective personal finance management is more important than the amount of money saved, regardless of whether income is earned through job or investment. Individuals can seek counsel from a certified financial advisor to optimize financial outcomes, who can provide specialized advice and methods to decrease expenses and maximize income.
I completely agree; I am 60 years old, recently retired, and have approximately $650k in external retirement funds. I am debt free and have very little money in retirement funds compared to the total value of my portfolio over the past three years. To be honest, the Fin-advisor can only be neglected, not rejected. Just do your due diligence to identify a fiduciary one.
Do your due diligence and opt for one that has tactics to help your portfolio continue consistent and steady growth. “Izella Annette Anderson” is accountable for the success of my portfolio, and I believe she has the qualifications and expertise to accomplish your objectives.
My CFA ’Izella Annette Anderson’ , a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
Retirees who struggle to meet their basic needs are the ones who could not accumulate enough money during their active years to meet their needs. Retirement choices determine a lot of things. My Husband and I both spent same number of years in the civil service, she invested through a wealth manager and myself through the 401k. We both still earning after our retirement
This is true. I'm in my mid 50's now. My wife and I were following this same trajectory. Last two years, I pulled out my money and invested with her wealth manager. Not catching up with her profits over the years, but at least I earn more. I'm making money even before retiring, and my retirement fund has grown way more than it would have with just the 401(k). Haha...
Interesting. I think this is something I should do, but I've been stalling for a long time now. I don't really know which firm to work with; I feel they are all the same but it seems you’ve got it all worked out with the firm you work with so i surely wouldn’t mind a recommendation..
I definitely share your sentiment about these firms. When I was starting out, I checked out a couple of freelance investors online, so you could do the same. I personally work with “Teresa L Athas”, and she's is widely recognized for her proficiency and expertise in the financial market. With a comprehensive knowledge of portfolio diversification, she is acknowledged as an authority in this field...
I converted my 401k to a Roth IRA to avoid higher taxes in the future. I'd rather pay taxes now than be stuck paying taxes on my retirement income when I'm 59 and living off my savings.
Pre-tax contributions may help reduce income taxes in your pre-retirement years while after-tax contributions may help reduce your income tax burden during retirement.
Both have their perks but you can also save for retirement outside of a retirement plan, such as an individual investment account or employing the services of a retirement planner/financial Advisor.
My CFA Melissa Terri Swayne, a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
I wish I had learned these principles about seven years ago. Many people remain deeply entrenched in the traditional mindset of pursuing education, securing a job, and working tirelessly throughout their lives. Unfortunately, this often leads to missing out on transformative financial opportunities. In 2020, I ventured into the stock market, and the results exceeded my expectations. Now, I’m considering investing an additional $90,000. Despite the current economic challenges, it seems that many investors are achieving impressive returns. Could you provide any strategic recommendations?
Avoid falling for schemes that seem too good to be true. Instead, seek advice from a fiduciary advisor-these professionals are highly regarded in the industry and provide tailored guidance based on individual risk tolerance. While there are less reputable ones, those with a proven track record can offer exceptional expertise.
Yes, I've been working closely with a Financial Analyst for about eight months now. These days, it's easy to get caught up in trending stocks, but the real challenge lies in deciding when to sell or hold. That's where my advisor comes in, providing strategic guidance on entry and exit points within the industries I'm invested in. I can't complain-I'm up 40% in profits over just five months on my initial capital of $160,000.
How can someone identify a reputable and verifiable financial planner? I’d be interested in learning more about the professional who has been assisting you. With retirement just two years away, I’m looking for reliable management for my significantly larger portfolio. I want to ensure everything is handled with care and precision-there’s no room for risks at this stage.
How can someone identify a reputable and verifiable financial planner? I’d be interested in learning more about the professional who has been assisting you. With retirement just two years away, I’m looking for reliable management for my significantly larger portfolio. I want to ensure everything is handled with care and precision-there’s no room for risks at this stage.
I just switched up my Roth IRA to 50% SCHD, 25% SCHX, 25% SCHG, and my Roth 401k is 70% vanguard S&P 500 index, 20% vanguard growth index, and 10% vanguard international index. Seeking best possible ways to grow $350k into $1m+ before retirement, I'm 55.
the strategies are quite rigorous for the regular-Joe. As a matter of fact, they are mostly successfully carried out by pros who have had a great deal of skillset/knowledge to pull such trades off.
True. Having the right financial planner is invaluable. My portfolio is well-matched for every season of the market and recently hit 90% rise from early last year. I and my CFP are working on a 7 figure ballpark goal, though this could take till Q3 2024.
I'm cautious about giving specific recommendations since everyone's situation varies, but I've worked with Marisa Michelle Litwinsky` for years and highly recommend her. Look her up to see if she meets your criteria.
@@Markjohnson09 Thank you for this tip. It was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her résumé.
Increasing tax rates are the reason I rolled over my 401k to a Roth. I don’t want to be 59 paying taxes on current income on withdrawals made from my retirement account. I'm now seeking best possible areas or ways to gain wealth in today's economy.
Pre-tax contributions may help reduce income taxes in your pre-retirement years while after-tax contributions may help reduce your income tax burden during retirement.
Both have their perks but you can also save for retirement outside of a retirement plan, such as in an individual investment account or employing the services of a retirement planner/investment advisor.
Private investing is the best way to go about the market right now, especially for near retirees, I've been in touch with a wealth manager, netted 370K the last downturn, made it clear there's more to the markets than we average joes know.
I'm cautious about giving specific recommendations as everyone's situation varies. Consider independent financial advisors like "Melissa Terri Swayne" I've worked with her since the pandemic and highly recommend her. You can check if she meets your criteria.
Hello, I am due for retirement in two years, I'm a senior citizen but I'm curious to know best how people split their pay, how much of it goes into savings, spendings or investments, I earn around $50K per year but nothing to show for it yet.
In this current unstable markets, It is advisable to diversify while retaining 70-80% in secure investments. looking at your budget, you should consider financial advisory.
I think you're better off with majority investment in S&P500 and uprising equities cos they always outperform. Also speaking with an advisor can help with pointers. I've been in contact with one I reached through commentaries here, she has been really helpful.
"Rebecca Nassar Dunne" is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
I’ve always spent less than what I made. I’ve always paid myself 1st. by using payroll deductions. If I got a raise I increased the pay roll deduction. I never went down on the deduction until I reached 59 and I started at 30. I decreased by about 50% I took more vacations that year and inflation caught up to me. I never borrowed against the funds.
Thank you for clarifying the second 5 year rule dealing with Traditional to Roth IRA conversions. I am 67. I have had my ROTH IRA for over ten years so rule 1 is satisfied. I plan to convert some of my traditional IRA to my ROTH IRA. So now that I am well over 59 1/2, and my ROTH IRA has been open for over 10 years, I will NOT, NOT have to wait 5 years after every Traditional IRA to ROTH IRA conversion I now make. It is amazing on so many of the online searches I tried, even reading the IRS publications how they skip over or do not address that rule 2 about conversions after age 59 1/2 .
When I was 26 and had just begun to save for retirement, my employer hired a consultant to teach retirement workshops. Their main recommendation at the "The Kids Table" program was to choose a retirement fund goal that corresponded with your 65th birthday. Twenty years have passed since then. I've only ever made one investment. What else can I do to improve my finances?
In addition to making me a multimillionaire, target date funds saw a 40% decline in a short period of time and a protracted recovery period. To avoid blunders, my best recommendation is that you seek the advice of an experienced counsel.
On the contrary, even if you’re not skilled, it is still possible to hire one. I am a project manager and my personal port-folio of approximately $750k took a big hit in April due to the crash. I quickly got in touch with a financial-planner that devised a defensive strategy to protect and profit from my port-folio this red season. I’ve made over $150k since then
I agree-having an advisor manage my investments has been invaluable since my work schedule doesn't allow time for in-depth analysis. Thankfully, my portfolio has grown fivefold in just four years, reaching nearly $1 million today.
@WiseMoneyShow - Wow! There seems to be a lot of confusion around the 2nd 5 year rule - does the 5 year rule matter on a roth conversion after 59.5! It makes sense that it WOULDN'T matter and that was my logic trying to get answers from people or even googling and they were saying it still needed a 5 year waiting period for each year converted! You have been the 1st one to explain it perfectly! So thank you!
A guy asked if he should take a HELOC for a home renovation. I said, "I wouldn't," and suggested saving instead. He didn't reply. Many homeowners are surprised by the idea of saving money instead of using home equity for projects like a backyard deck. I chose to save and invest in the stock market instead, which has helped me build long-term financial stability without taking on additional debt.
I believe a healthy portfolio has 3 things, at the bare minimum: Exposure to ETFs for increased diversification, Exposure to assets that generate cash flow like dividend stocks, Exposure to market-leading tech.
Thanks for sharing. I curiously searched for her full name and her website popped up immediately. I looked through her credentials and did my due diligence before contacting her.
people are creatures of habit and learn that it is normal to have a mortgage. When that mortgage is gone they literally feel like that void in there payments needs to get filled. It's actually abnormal to fill that void with savings, as it's something foreign to the majority of people.
Thank You!!! This was certainly the best explanation of the 5-year rule and the two parts. The second part was most important to me and frustratedly unfair and unclear to me. But you have enlightened me on the second part of the rule as it relates to conversions. Age 59.5 is the key as it relates to Roth conversations, once that mark is met all that money is usable at any time. Thank you Sir!!
@thomasridley458 - one of the things I got, was once you've been investing I nto a Roth IRA for more than five years, after 59.5 years of age, any money invested becomes distributive. However, if you've had the Roth IRA for more than five years, and you're over 59.5 years old, if you take the money right out, then it hasn't even had time to earn any interest, so there's no real benefit
So let me make sure I got this straight: 1) You can always withdraw your initial contribution so long as it wasn't from a roth conversion. Age of person and roth don't matter for that. 2) You can only withdraw your earnings once 59.5 AND if you've had a roth IRA at least 5 years, again ignoring conversions 3) If you convert to a roth, 5 year rule applies to each conversion year until you are 59.5, and this applies to both the initial contribution and earnings Did I get that right?
Re your question 3: I just rewatched the video, and around 5:20 he said even if you are 59.5+, you still need to have opened your first Roth IRA at least 5 years prior. He specifically mentioned taking distribution of the converted BASIS, so I'm not totally clear on distributions that include any growth from the converted dollars.
Two five year rules (well 3 if you include inheritance) and two "penalties" 1. income tax 2. 10% early withdrawal. Complicated indeed and there are many sites out there that get this wrong. This video is 100% correct. Always cross reference info on the IRS website as that is the final word on the subject.
I agree with your comments, BUT not all CPA's and Financial Advisors are thoroughly up on all the specifics of Roth accounts and Roth conversions. I have recently completed our series of Roth Conversions and have purposely not converted every last penny into our Roth accounts. What has greatly helped us was having a cash reserve for the taxes and always having an avoidance to most debt. Sure some of the recent mortgage rates have been wonderful and I can appreciate how nice it'd be to have one(if I needed one). 50+ years ago I inherited $3500 from my grandfather that was meant to be for college. I got my degree while also working and I still had that chunk of inheritance. My parents chose not to bequest money to their grandchildren, so I decided to open Roth accounts for our children and one part time working teenager. Like a teenager, college impo9rtance is not always understood, but I trust there will be a time when my heirs will appreciate my efforts!
1) You can always withdraw your initial contribution so long as it wasn't from a roth conversion. Age of person and roth don't matter for that. 2) You can only withdraw your earnings once 59.5 AND if you've had a roth IRA at least 5 years, again ignoring conversions 3) If you convert to a roth, 5 year rule applies to each conversion year until you are 59.5, and this applies to both the initial contribution and earnings Did I get that right?
@@consciouscrypto3090 1) Yes contributions are always available for withdrawal without any penalty, BUT the IRS expects you to track/report it for certain withdrawals before 59 1/2 on Form 8606 - Part 3. They want to make sure you aren't withdrawing anything that's subject to tax or penalty. 2) You are correct, but to clarify you CAN withdraw it, BUT you will be subject to tax and penalties. 3) This one gets weird. Conversions are NEVER subject to taxes (you already paid taxes upon conversion), only the 10% early withdrawal penalty applies if before 5 years (for each conversion) and before 59 1/2. This is why that penalty goes away completely after 59 1/2.
@@consciouscrypto3090No. The IRS classifies Roth money three ways. 1) Contributions. 2) Conversions. 3) Earnings. It also expects withdrawals to follow the SAME order. Therefore, both contributions and conversions can be withdrawn tax-free at any time and any age BECAUSE taxes on those funds have already been paid. Earnings, however, are subject to taxation until the IRA account has been open 5-years and until the account owner has reached age 59.5.
I’m 52 and investing for the first time in my life. I have started contributing to my 401K and opened a Roth IRA with automatic contributions, but my question is, does asset allocation really matter at first, or perhaps I am just overthinking as a beginner?
I'm in line with having an advisor oversee my day-to-day investing cos, my job doesn't permit the time to analyze stocks myself. I got fully invested since the covid-outbreak, and thankfully, my 6 figure portfolio has 5X in barely 5 years, amassing nearly $1m as of today.
good gains! who is the professional guiding you please? enthused about investing for my eventual retirement but dont know how to go about it, for now I only invest in my 401k through my employer and gains are quite slow
Rebecca Lynne Buie is my FA. Just google the name and you’d find necessary deeds to work with. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did.
thanks For clearing that up, I curiously searched for Rebecca Lynne Buie on the internet and thankfully, I came across her my goal is to retire in 5years time.
No Kidding! Cuts right through the crap. I wish I could find someone like him in Phoenix... Most of the people I talk to are only interested in getting my assets under their management so they can pay off that new BMW... 😞
Yes there are many little rules and have been delays in providing some of the rules as well. When a Roth account is inherited by a non-spouse, or when the non-spouse beneficiary dies and a contingent beneficiary inherits the contingent may not have their own 10 year time period, and perhaps the balance of the original beneficiary's 10 year period. Always pay to be informed!
This video is excellent. I asked my advisor about the 5-year rule and didn't get an answer. This answers all my questions and clears up a confusion I had about the 5-year rule. I had no idea about the 1-year rule for the kids. That sounds awesome.
Buffet was also selling when the pandemic hit, a great entry point for people of my generation (30s, 40s) and a great period for stocks overall. My question is do you think it's a good time to consider selling some stocks too? I’m considering rebalancing my $2M portfolios and curious for the best strategies to do so.
@@AlbertGReene-p8w I agree. Exactly why I now work with one. A lot of folks downplay the role of advisors until being burnt by their emotions, no offense. I remember some years back, during the covid-outbreak, I needed a good boost to stay afloat, hence researched for advisors and thankfully came across one with grit. As of today, my cash reserve has yielded from $350k to nearly $1m.
Good info, my husband is 68 has had a roth for 5 years we plan on adding small conversions. I wondered why we couldn't use it just like a tax free cash account. Dip in when needed, yes we can somewhat.
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got talking about investment and money. I started investing with $120k and in the first 2 months , my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and gets more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second daughter. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks.
@@BennettElizabth Quitting may not be the best approach if you ask me. This is where an AI comes into the picture. I barely have time to trade myself as my job swallows up most of my time. *MARGARET MOLLI ALVEY*, a licensed fiduciary whom has made me over 5 figures in profit in less than seven months, handles my investments. I could leave you a lead if you need help.
I recently retired at age 65 I went from a NYSDCP into a standard IRA With a Roth IRA as well. I have been converting my IRA into my Roth IRA periodically to minimize my tax burden. I have not yet reached the initial "Five Year Rule" The overall balance has been remaining fairly constant, even paying the taxes with annual conversions
Penalities exist if you withdraw before 59.5( i have done it )..lost the savers credit for 3 years when i took $600 out when i had a surgery,,i figure it cost me more than $600 lost savings ....2. I have a co-worker whom asked me about opening a Roth and doing conversions( he just turned 60 and his wife also)....good info
I was aware of the second 5 year rule but not the first five year rule. And the reason is because I did a conversion many years ago. It was a small one but it was in my mind a security blanket kind of decision. That security blanket I thought I needed never came to fruition but now I have a Roth IRA because of it so when I retire I can move my Roth 401k into that IRA and I don't have to wait 5 years to touch any of that money? That's what I heard him say
I thought I was following, but the last bit of information threw me off a little: If I plan on retiring at 60 and most of my savings are in pre tax 401k…and I choose to do a Roth conversion at 61, 62, 63…using my low-income years before social security to do my conversions to minimize my taxes…the Roth conversions I do after 59.5 aren’t subjected to the 5 year rule, right? However if I did conversions all the way up to age 59…THOSE conversions would need to wait five years each? (Double checking, ha!) Thank you for the info!
With Roth IRA, the money you are contributing has already been taxed. At any time for any reason, you can withdraw your contributions tax-free and penalty-free. Additionally, any earnings on investments can also be withdrawn tax-free and penalty-free, Not sure how much to contribute, I'm still at a crossroads deciding if to liquidate my $338k stock portfolio.
For the average person, the strategies are fairly demanding. In actuality, most professionals who have the necessary abilities and knowledge to complete such occupations do so successfully.
I agree, that's the more reason I prefer my day to day investment decisions being guided by an advisor, seeing that their entire skillset is built around going long and short at the same time both employing risk for its asymmetrical upside and laying off risk as a hedge against the inevitable downward turns, coupled with the exclusive information/analysis they have, it's near impossible to not out-perform, been using my advisor for over 2years+ and I've netted over 2.8million.
'Carol Vivian Constable, a highly respected figure in her field. I suggest delving deeper into her credentials, as she possesses extensive experience and serves as a valuable resource for individuals seeking guidance in navigating the financial market.
Just to be clear. After age 59.5, If I roll over money from my 401k into my roth IRA that I've had for more than 5 years, I do not have to wait 5 years to use that money, correct?
@@3piloteach conversion has a 5year rule. I read the IRS literature on it. My understanding is that the money you paid tax on is available immediately but the earnings are under the 5year rule.
Question: if we convert traditional IRA to roth in age 60 (of course paying the taxes during conversion), and withdraw next day from roth ira, why the 5 year rule should apply.? My understanding is that one has to wait 5 years to withdraw the gain ; not the contribution...
I started mine late at 57 years ago i will not have access until 62. But at 59.5, I can start converting some of my 401K money over. I had never heard of that 5-year rule until i opened my account. Nice explanations, though.
Outstanding! This is the kind of common sense information I need! How come I can't find someone like you around here? I keep interviewing retirement/financial planners that don't know everything I do... 😞 I guess the only problem I have now is when and how much pre-tax IRA investments should I convert. Right now I'm told if I convert too much my taxes will be through the roof even though I'm retiring...
Thank you for this info. I have two Roth IRAs at different brokerages, and I thought each one had to be 5 years old before I could withdraw from it. Glad to know that as long as one of them is 5 years old, I can access both.
retired at 60 with $750K in my 401K and IRA's. My wife and I did just fine in expensive Bergen County, NJ by living within our means. Home was paid off. No car loans. By withdrawing bare minimum, our health insurance costs were almost non-existant due to Affordable Care Act subsidy. SS kicked in at 62. Medicare at 65. Six years later, my IRA balances have grown to $850K and now my wife is turning 60 and her IRA's are now available. Anything is possible if you live within your means. Merry Christmas!!
I plan to retire at the end of 2025 at 62 after 36 years in Telecom as a sales engineer. My wife will retire in May 2026 and she's loving life! But walking away from a good income stream and building the nest egg to living from the nest egg is a scary proposition couple with the alarming recession and CPI report
@@SheronKoss I feel your pain mate, as a fellow retiree, I'd suggest you look into passive index fund investing and learn some more. For me, I had my share of ups and downs when I first started looking for a consistent passive income so I hired an expert advisor for aid, and following her advice, I poured $80k in value stocks and digital assets, Up to 200k so far and pretty sure I'm ready for whatever comes.
@@SheronKoss The advisor am currently working with is Allison Camille shaw. i came across her in a Bloomberg interview for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look her up.
The roth was opened by accident so i converted it that same year to a traditional for tax reasons. It still has one cent in that roth so is it still considered the 5 years still even if it just has 1 cent in it and i restart adding money in it now.
Not sure if he really clarified the difference between original conversion amount vrs the gains-interest-div cap appreciation of the original amount. I understand that if you convert ira to Roth over 59.5.. you can take out the Basis.. or original conversion amount ... anytime.. no tax no penalty.
I had the same question about earnings, only because a little after 5:20 he mentioned BASIS specifically in his example where person was over 59.5 AND a Roth had been opened at least 5 years prior.
Thanks! 1. Open Roth IRA now for 5 yrs rule( holding Roth IRA does not qualify) 2. Roth conversion is taxable 3. Inherited Roth IRA- now you have 10 yrs after date of death to withdraw those Roth balance
Holding a Roth *401K* doesn't count towards any 5 year requirement. You must have opened your first Roth *IRA* for at least 5 years to satisfy that rule for withdrawing converted funds out of a Roth IRA.
I have an $800k portfolio from my old job and retired six years ago. Lately, it’s been doing poorly, with only 6% growth in the past three years and I feel stuck. I desperately need to revamp my investments. Any advice on what to do with my money would be greatly appreciated.
This is what people that handle their p0rtfolio themselves go through. I will advice you get yourself some fiduciary advisōr to help you make better p0rtfolio decisions.
I agree, investing with the help of an advisor set me up for life with about $1.6m currently in stock portfolio. I max out my 401k and have few properties. I worked hard as a language tutor for 32 years, and my salary was just over 80k annually. It all boils down to consistent regular investing to minimize risks and maximize growth.
I'm cautious about giving specific recommendations since this is an online forum and everyone situation is unique, but I've worked with "Melissa Elise Robinson" for years and highly recommend her. Look her up to see if she meets your criteria.
Thanks for sharing. I curiously searched for her full name and her website popped up immediately. I looked through her credentials and did my due diligence before contacting her.
Let's be very clear. Suppose you convert 10K into Roth. Can you withdraw that 10K anytime out? Does the 5-year rule apply to that principal or just the "growth" (or gain) from it? You already pay taxes on that principal when you convert.
Does the roth creation have to have money in it to start the 5 year counter, however small? Or can you just create it with a zero balance and then 5 years later it use it.
my first Roth I have had now for more then 5 years. I started a new job 1.5 years ago, and started a new 401k and 401Roth account. I am 61 now. I contributed 10k to the Roth new account and now have about 40k in it from gains. Question , do I pay a penalty if I take out these gains in my Roth that I opened a year and half ago?
I started my Roth/401K at the age of 60. Do I still need to wait 5 year rule before I can withdraw my money? Also, I am thinking of converting some of my savings from 401K to Roth/401K and I will pay the taxes, do I still need to wait 5 years to withdraw my money from Roth/401K? Thanks in advance for the answers.
Hello, I've been intently watching retirement videos recently as I'm looking at retirement in 5 years (now 58). This is the first I'm hearing about a 5 year rule. I've been contributing for years in my 401K and started many years ago also contributing to my 401K Roth account. Are you saying I need to get a Roth IRA account set up ASAP? Also, if I do put $100 in a Roth IRA, after the 5 years, can I take the growth from my Roth 401K without penalty since it's not doing a conversion, it's just a withdraw from a Roth account?
I have not been able to contribute to a Roth IRA due to income limits.. you implied however I can open a small one anyway. Can someone explain what that means? I would like to do that if I can get the 5 year thing out of the way. 🙂
It's *back door* Roth IRA process: contribute $7,000 to traditional IRA and then convert that $7,000 t-IRA to $7,000 Roth IRA. Caveat, pro rata tax rule applies if you have current traditional IRA from years back. Pro rata can be avoided if you have traditional 401(k). Do you already have t-IRA and if so do you have 401(k)?
I moved 401k to ira and converted to roth this year. If I wait 5 yrs I will still be less than 59.5 . Will I able to take just the converted amount before 59. 5?
I have a small amount of money characterized as a ROTH 401K. Does that count for the 1st 5 year rule? i want to move that money into a ROTH IRA, then start characterizing traditional 401K money into a ROTH IRA. Did both 5 year rules start "ticking" when I characterized money as a ROTH 401K?
Let's say I am 60 years old and currently have $50k in a Roth IRA. I also have a regular IRA with $50k in it. If I do a Roth conversion on the $50k regular IRA and put it into my existing Roth account, do I have $100k that I can withdraw at any time?
@cometcal2 I'd say it depends when you first contributed to the Roth IRA. If it has been more than 5 years since you first contributed to the Roth IRA then YES you have $100K you can withdraw tax free/penalty free (assuming you paid the taxes on that rollover with other funds not part of the conversion dollars). if it has not been 5 years since you first contributed to the Roth IRA then the answer is NO (based on what I got out the Wise Money Show video above ). For example lets say you open and funded the Roth only 4 years ago. Lets also say you contributed $7000 per year for 4 years. Your contribution total is $28,000. If your account balance is $50,000 then you have $22,000 worth of earnings on that 28K. After you convert $50,000 from your Traditional IRA to your Roth this is what you have. $28,000 of Contributions, $22,000 worth of earnings, $50,000 from the Rollover. but you can only withdraw the $28,000 of Contributions + $50,000 Rollover dollars = $78,000 tax free and penalty free. I f you withdraw more you will be hit with the 10% early withdraw penalty. I think the 10% penalty would only be on the $$$ over 78K but I am not sure. Someone please correct me if I am wrong.
I Have a question ? My company recently switched to a new 401k company and I have $6900 in the old ROTH 401K can I roll that over to my ROTH IRA that I have at my bank?
Let's say if you're older than 59.5, Rollover IRA to Roth conversion, still apply 5 year rule? I have Roth IRA contribution (each year contribution) 10 years ago. Each conversion apply own each 5 year conversion rule? It seems my CPA doesn't know about it well.
The 5-year rule for Roth IRAs is a guideline that determines when you can withdraw money from a Roth IRA without taxes or penalties. It applies in two scenarios: 1. Qualified Distributions of Earnings: To withdraw earnings from your Roth IRA tax- and penalty-free, you must meet two conditions: • The account has been open for at least 5 years. • You are at least 59½ years old, disabled, using the funds for a first-time home purchase (up to $10,000), or deceased (in which case your heirs benefit). 2. Conversions to a Roth IRA: If you convert funds from a traditional IRA to a Roth IRA, the 5-year rule applies separately to each conversion. This means the converted funds must remain in the Roth IRA for 5 years to avoid an early withdrawal penalty (10%), even if you are over 59½. However, the penalty applies only to the converted amount, not the earnings. Each 5-year period begins on January 1 of the year you make the contribution or conversion, regardless of the specific date within that year.
Thank you for the great video… Answered some questions I had. But if my wife and I are making more than the allowable amount for a Roth IRA, am I still able to open up a Roth IRA for $100? Should she and I both open up to separate Roth IRA for $100 so that we can have them open for five years in order to access, the Roth in my 401(k) at retirement without waiting five years? Also, with my money in the 401(k), both traditional and Roth, do I have to convert that in order to access the money? Or can I simply withdraw from those accounts? Not understanding the pros and cons of converting either out of the 401(k) as opposed to just drawing from where it is now. I’m sure I’m missing something…
So say I transfer $10,000 to a Roth IRA account that's already met the first 5-year rule. Will even that principal amount (not the interest) of $10K be subject to tax if I withdraw it from the Roth before it's been there for 5 years?
Basis (IRS language for cost) can be withdrawn from a Roth at ANY time with no tax due. This means any “regular” contributions made to a Roth. It also includes CONVERSION dollars added to a Roth. Both five year rules were written to prevent “loopholes” from people avoiding tax. So the only amounts subject to taxation are earnings and growth and pre-age 59.5 withdrawals that include earnings and growth.
I’m confused. I’ve had a Roth IRA since 2019 that hasn’t had any deposits since that first year. It’s just over 5 years ago. I have an IRA converted from a 401k from an employer, and I’m 61 now. Are you stating I can convert that into a Roth IRA now and I don’t have to wait 5 years before withdrawing those funds? I’m considering converting a “small” amount each year into a Roth to avoid taxes (I have no taxable income). Would I be able to withdraw those funds let’s say “next year?” I wouldn’t have to wait 5 years? I would suspend converting for that year of the IRA during the year of withdrawal to further avoid any taxable event. I know I’m being very specific, and I have plenty of nontaxable funds to live on otherwise. Is this a question I need to contact you on or can you answer here? I don’t do very well on the phone. I’m on the spectrum (ASD).
There is a flow chart in the IRS publication that addresses how retirement income is taxed or not taxed. The flowchart is much easier to understand than RUclips videos or the actual written paragraphs in the IRS publication itself.
Is it advisable to make a “new” Roth account with each conversion? Or can I combine each rollover into the same account? First was done 10 years ago. I’m over 59.5. The fund in my Roth is closed to new investors so if I fund a new account, I will be unable to purchase additional shares.
Depends on careful record keeping. I have a SINGLE Roth account, and just track my 1) contributions, 2) conversions, but do not worry much about “earnings” because the default method the IRS uses in its formulas is contributions, then conversions, then earnings when distributions are taken out.
I have a IRA question. My wife took out a distribution from her IRA in the calendar year she was 59.5 but the day she withdrew it out on the particular year of that same calendar year she was technically 59 and not reached the 59.5 until later that same year. Does the 10% tax penalty happen for that withdraw? She messed up but hopefully since she turned 59.5 that same calendar year, the penalty doesn't apply. Thanks for the response.
Roth 401K isn’t the same as a Roth IRA? I converted my post tax contributions in my 401K to a Roth. The clock doesn’t start until I quit my job and move it to a Roth IRA? Thanks, D.
Can I withdraw @10K from a Roth 403B with no penalty if I use the funds to buy a house as a first-time home buyer and I am not 59.5 years old? I left my employer last year but have not rolled over the Roth 403B from the financial institution.
I had an old 401k and my wife had a simple ira, from our previous employers. When the market tanked a few years back, I think around January, our CPA suggested it was a great time to covert them to ROTH IRA's. Pay less taxes, when there is less money! Our ROTH's make up about 40% of our retirement(most in current company 401k), but i'm still nervous we won't have enough in ROTH and HSA. But as our side business takes off, I want to put half the profits into a brokerage account for early retirement and rainy day use. I feel like that gets tricky with W-2 and 1099, for taxes. 1099 only would be a lot easier to have lower NET income.... But I guess I do have about 20 years to figure it out still... ha
The first 5 year is for contributions, He said do a small conversion, "even if its $100" to start the clock. This is incorrect. You need to contribute to a Roth to start the clock on the 1st 5 year rule.
He said this in the context of someone who makes too much money to contribute (start) a Roth account. This is another way to start an account. He was correct in this.
Caveat to point he said, Roth 401k money let's say has been made 5 yrs ago...rolled to Roth IRA CAN meet the 5 yr rule upon rollover if the record keeper of the 401k simply reports the date of first Roth contribution to the IRA provider u selected. So it's worth asking ahead of time if the date will be reported. Fyi.. ideally though as he said it's best to just start a Roth IRA at any age prior to 5 yrs from retiring so u have it all covered.
Question: I withdrew a large sum from my IRA ( after withdrawing RMD) this February . I didn’t withhold any taxes at the time, can I pay the amount of taxes owed next year when I do my taxes or do I have to pay any amount sooner. I’m 75 .
You have to pay estimated taxes on your money as a senior. So when you do a Roth conversion you have to pay estimated taxes. But the IRS wants you to pay estimated taxes on an equal basis basically for the four quarters of the year. If you use the amount you paid in taxes for the previous year and use that amount quarterly paying your estimated taxes that's called safe harbor and your large conversion won't matter, because you're under safe harbor and your pain the IRS what you paid in last year's tax returns total taxes. Then when you file your tax return and you owe more money on the conversion you just pay the money with your tax return. If you're not paying estimated taxes you'll end up getting penalized when you pay your taxes with your tax return.
If you wait to pay the taxes due when you file your tax return, the IRS will charge you an extra penalty for “underpayment” if you do not send in estimated tax payments each quarter.
I inherited a traditional IRA I took out 22k, after a month and they held 10%(federal) of the withdrawal a little over 2k..... i know i am going to have to pay more taxes on that withdrawal but does anyone know how much more?
I thought the second five year rule is a penalty on just to the growth of the funds after the conversion, not the entire amount. Growth over 5-years can be very little or a lot, but you've already paid the taxes on the principal, and that is not penalized.
Nice I retired at 53 rolled my ROTH 401K into a ROTH IRA now I’m 59 will be 59 1/2 voilà 5 year rule met! But I was allowed to take the principal out before the 5 year point.
No mention of an income limit for Roth.. i was going to open a Roth IRA to start the first 5year rule but I make too much money to be able to open a Roth. I have ROTH 401 and traditional 401K but wanted to start a Roth IRA to get my 5 years in.. i will likely start converting at some point to Roth IRA as I dont think I can convert to Roth $01 from traditional
IF I (+65 yo) have to make a mandatory distribution from my 401k (non-Roth), and if I deposit the distibution to my Roth (Established >5 years ago) will I avoid taxes on the distribution?
You could rollover the non-roth to a Roth but you would need to pay taxes on the total amount of the rollover as if it is income. Then going forward there would be no required min distributions.
I don't believe you can use rmd money to convert to a Roth. I believe that money would have to be used or put into a brokerage account. After you take your rmd, if you are at the age that you must start doing that, and if you want to then do a Roth conversion, then you have to take more money out after the rmd and do the conversion of that money. Then you will pay taxes on the rmd amount and the amount you converted.
To do a Roth conversion, do you have to have a W-2 job? Can you setup a Roth after retirement? After you retire, you no longer receive W-2 tax forms. Did I miss something?
Not to do a conversion from a 401k or IRA. Contributions are a different story. You can do conversions but cannot do contributions unless you are not working.
When dollars are in funds/shares, that 15-20-25-35% income tax rate could challenge the Roth being a better option. Look at your tax brackets what rate you expect when retiring. You might be paying a higher rate now than in retirement. In my case traditional IRA/401k and maximizing shares purchased during my working years has more "shares/dollars" working for me. Just speaking about dollars vs the actual dollars in shares of a fund can be a missed opportunity when you have pretax dollars working for you for a longer period.
You should read about 1) IRMAA penalties-which are hidden taxes that get deducted by social security to cover Medicare costs; and 2) RMD’s (IRS mandated required minimum distributions). In many cases, Roth accounts are preferable to “regular” IRAs.
I recently adjusted my Roth IRA to 50% in SCHD, 25% in SCHX, and 25% in SCHG. For my Roth 401k, I went with 70% in Vanguard's S&P 500 Index, 20% in the Vanguard Growth Index, and 10% in the Vanguard International Index. My goal is to grow my $350k to over $1 million within the next three years.
It might be worth considering a financial advisor to avoid constant adjustments. Your selections are strong, especially for a $350k portfolio.
I agree-having an advisor manage my investments has been invaluable since my work schedule doesn't allow time for in-depth analysis. Thankfully, my portfolio has grown fivefold in just four years, reaching nearly $1 million today.
That's impressive! Would you mind sharing your advisor's details? I’m in urgent need of rebalancing my portfolio.
@@CarddtReddt I work with Rebecca Lynne Buie. At first, I was hesitant to let someone else handle my investments, but it turned out to be the best decision I’ve made.
Thank you for sharing! I did a quick search for Rebecca Lynne Buie online, found her consulting page, and scheduled a call. She seems to have a high level of expertise.
My company paid a consultant to provide retirement classes when I was 24 and just started saving for retirement. The class was called "The Kids Table" and basically their advice was go with a target retirement fund that aligned with your 65th birthday. That was 20 years ago. It is the only thing I've ever invested in. How else can I grow my finance?
target date funds made me a multimillionaire but i also watched them drop 40% in a very short time and take a long time to recover. my best suggestion is that you seek the guidance of a seasoned advisor to avoid mistakes
When it comes to ‘’personal’’ finance/retirement planning, following the steps of a seasoned advisor did the trick for me in just 5 years. Helped turn my capital into a whooping 6 figure yearly returns. If you want to keep it very safe, then Vanguard TDF may be for you.
@@PatrickLloyd- any recommendations for advisory service in regards to building my portfolio? I don't really know where to start
I've stuck with SOPHIE LYNN CARRABUS since the pandemic, and her performance has been consistently impressive. She’s quite known in her field with over two decades of experience, simply look her up.
thanks for the lead, curiously searched Sophie by her full name, easily spotted her consulting page and was able to schedule a call session, she seems highly professional from her resumé
At 32, I'm diving into investing for the first time. I’ve started contributing to my 401K and opened a Roth IRA with automatic contributions. My main question is whether asset allocation is crucial at this stage or if I'm just overthinking as a beginner.
There are so many choices to make, and for beginners, it's often best to entrust daily investment decisions to an experienced advisor.
I completely agree-having a professional manage my investments has been invaluable. My job doesn’t allow time for in-depth stock analysis, so I entrusted an advisor with my portfolio. I’ve been fully invested since the COVID-19 outbreak, and I’m happy to say my portfolio has grown fivefold in just five years, reaching nearly $1 million.
Impressive gains! Who's guiding your investments? I’m excited to invest for my future retirement, but I'm unsure where to begin. Currently, I’m only contributing to my 401K through my employer, but the returns have been slow.
Rebecca Lynne Buie has consistently been my top recommendation. She’s widely recognized for her expertise in financial markets and has a strong track record. I highly recommend her.
Thank you for the recommendation. I was curious, so I looked up Rebecca Lynne Buie online. Her consulting page came up at the top, and I’ve scheduled a call. I've heard about advisors before, but none have looked as impressive as she does.
Investing in Roth IRA can be a good choice since they are funded with after tax dollars, your contributions can grow tax-free over time. When you withdraw money from your Roth IRA in retirement, you won’t have to pay tax on it, which will help you keep more of your hard-earned money. I retired with 5 million dollars
If you’re new to investing or have a more complex financial situation, It can be helpful to work with a financial advisor who can provide personalized guidance and help you make informed investment decisions.
On the contrary, even if you’re not skilled, it is still possible to hire one. I am a project manager and my personal port-folio of approximately $750k took a big hit in April due to the crash. I quickly got in touch with a financial-planner that devised a defensive strategy to protect and profit from my port-folio this red season. I’ve made over $150k since then
Due to the market falls, I need advice on how to rebuild my portfolio and develop more successful tactics. Where can I find this teacher?
Finding financial advisors like “Sonya Lee Mitchell” who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
I searched for her name on the internet, found her page, and reached out via email to schedule a conversation. Thank you.
Dividend investing is my jam! I'm building wealth with a buy-and-hold strategy in my Roth account, featuring rockstars like Berkshire B stock, SCHD, and S&P 500 and total market ETFs. My taxable account is also getting in on the action, generating regular income through dividend-paying stocks. It's a winning combo that's helping me achieve my financial dreams!
The best strategy depends on your financial situation, account types, tax bracket, and investment goals. Consult a financial advisor or tax professional to tailor these strategies for maximum tax efficiency.
My advisor helped me rebalance my $2m portfolio without triggering capital gains taxes by using tax-advantaged accounts and reallocating dividends and new contributions. They also recommended tax-loss harvesting and strategies to stay within my tax bracket. Q2 taxable divs this year was $17,388 thanks to her guidance. I maintained my desired asset allocation while minimmising taxes.
Glad to stumble on this commentary, I've been getting suggestions to use one, but where and how to find one has been challenging, Can i reach out to the one you use?
I'm cautious about giving specific recommendations since this is an online forum and everyone situation is unique, but I've worked with Jarrod Gabriel Sandra for years and highly recommend her. Look her up to see if she meets your criteria
I just googled her now and I'm really impressed with her credentials. I reached out to her since I need all the assistance I can get.
Investing in a Roth IRA is a smart choice because contributions grow tax-free over time, and withdrawals in retirement are tax-free. This allows you to keep more of your hard-earned money. Starting early maximizes the benefits of compounding, where your investment grows exponentially by earning interest on both the initial amount and the interest it accrues.
Effective personal finance management is more important than the amount of money saved, regardless of whether income is earned through job or investment. Individuals can seek counsel from a certified financial advisor to optimize financial outcomes, who can provide specialized advice and methods to decrease expenses and maximize income.
I completely agree; I am 60 years old, recently retired, and have approximately $650k in external retirement funds. I am debt free and have very little money in retirement funds compared to the total value of my portfolio over the past three years. To be honest, the Fin-advisor can only be neglected, not rejected. Just do your due diligence to identify a fiduciary one.
@@mikegarvey17This is exactly how i wish to get my finances coordinated ahead or retirement. Can I get access to your advisor?
Do your due diligence and opt for one that has tactics to help your portfolio continue consistent and steady growth. “Izella Annette Anderson” is accountable for the success of my portfolio, and I believe she has the qualifications and expertise to accomplish your objectives.
My CFA ’Izella Annette Anderson’ , a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
Retirees who struggle to meet their basic needs are the ones who could not accumulate enough money during their active years to meet their needs. Retirement choices determine a lot of things. My Husband and I both spent same number of years in the civil service, she invested through a wealth manager and myself through the 401k. We both still earning after our retirement
This is true. I'm in my mid 50's now. My wife and I were following this same trajectory. Last two years, I pulled out my money and invested with her wealth manager. Not catching up with her profits over the years, but at least I earn more. I'm making money even before retiring, and my retirement fund has grown way more than it would have with just the 401(k). Haha...
Interesting. I think this is something I should do, but I've been stalling for a long time now. I don't really know which firm to work with; I feel they are all the same but it seems you’ve got it all worked out with the firm you work with so i surely wouldn’t mind a recommendation..
I definitely share your sentiment about these firms. When I was starting out, I checked out a couple of freelance investors online, so you could do the same. I personally work with “Teresa L Athas”, and she's is widely recognized for her proficiency and expertise in the financial market. With a comprehensive knowledge of portfolio diversification, she is acknowledged as an authority in this field...
Scam thread could steal your funds. Be cautious; reported to you tube.
Scam thread could steal your funds. Be cautious; reported to you tube.
I converted my 401k to a Roth IRA to avoid higher taxes in the future. I'd rather pay taxes now than be stuck paying taxes on my retirement income when I'm 59 and living off my savings.
Pre-tax contributions may help reduce income taxes in your pre-retirement years while after-tax contributions may help reduce your income tax burden during retirement.
Both have their perks but you can also save for retirement outside of a retirement plan, such as an individual investment account or employing the services of a retirement planner/financial Advisor.
How can one find a verifiable financial planner? I would not mind looking up the professional that helped you
My CFA Melissa Terri Swayne, a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
Found her online page by searching her full name, I wrote her an email and scheduled a call, hopefully she responds.
I wish I had learned these principles about seven years ago. Many people remain deeply entrenched in the traditional mindset of pursuing education, securing a job, and working tirelessly throughout their lives. Unfortunately, this often leads to missing out on transformative financial opportunities. In 2020, I ventured into the stock market, and the results exceeded my expectations. Now, I’m considering investing an additional $90,000. Despite the current economic challenges, it seems that many investors are achieving impressive returns. Could you provide any strategic recommendations?
Avoid falling for schemes that seem too good to be true. Instead, seek advice from a fiduciary advisor-these professionals are highly regarded in the industry and provide tailored guidance based on individual risk tolerance. While there are less reputable ones, those with a proven track record can offer exceptional expertise.
Yes, I've been working closely with a Financial Analyst for about eight months now. These days, it's easy to get caught up in trending stocks, but the real challenge lies in deciding when to sell or hold. That's where my advisor comes in, providing strategic guidance on entry and exit points within the industries I'm invested in. I can't complain-I'm up 40% in profits over just five months on my initial capital of $160,000.
How can someone identify a reputable and verifiable financial planner? I’d be interested in learning more about the professional who has been assisting you. With retirement just two years away, I’m looking for reliable management for my significantly larger portfolio. I want to ensure everything is handled with care and precision-there’s no room for risks at this stage.
How can someone identify a reputable and verifiable financial planner? I’d be interested in learning more about the professional who has been assisting you. With retirement just two years away, I’m looking for reliable management for my significantly larger portfolio. I want to ensure everything is handled with care and precision-there’s no room for risks at this stage.
Market behaviour can be complex and unpredictable. Mind if I ask you to recommend this particular coach to whom you have used their services?
I just switched up my Roth IRA to 50% SCHD, 25% SCHX, 25% SCHG, and my Roth 401k is 70% vanguard S&P 500 index, 20% vanguard growth index, and 10% vanguard international index. Seeking best possible ways to grow $350k into $1m+ before retirement, I'm 55.
the strategies are quite rigorous for the regular-Joe. As a matter of fact, they are mostly successfully carried out by pros who have had a great deal of skillset/knowledge to pull such trades off.
True. Having the right financial planner is invaluable. My portfolio is well-matched for every season of the market and recently hit 90% rise from early last year. I and my CFP are working on a 7 figure ballpark goal, though this could take till Q3 2024.
@@Markjohnson09 impressive gains! how can I get your advisor please, if you dont mind me asking? I could really use a help as of now
I'm cautious about giving specific recommendations since everyone's situation varies, but I've worked with Marisa Michelle Litwinsky` for years and highly recommend her. Look her up to see if she meets your criteria.
@@Markjohnson09 Thank you for this tip. It was easy to find your coach. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her résumé.
Increasing tax rates are the reason I rolled over my 401k to a Roth. I don’t want to be 59 paying taxes on current income on withdrawals made from my retirement account. I'm now seeking best possible areas or ways to gain wealth in today's economy.
Pre-tax contributions may help reduce income taxes in your pre-retirement years while after-tax contributions may help reduce your income tax burden during retirement.
Both have their perks but you can also save for retirement outside of a retirement plan, such as in an individual investment account or employing the services of a retirement planner/investment advisor.
Private investing is the best way to go about the market right now, especially for near retirees, I've been in touch with a wealth manager, netted 370K the last downturn, made it clear there's more to the markets than we average joes know.
Who is this Adviser or investor you use? I lost over 35000 already this year, I’m in need of a planner going forward.
I'm cautious about giving specific recommendations as everyone's situation varies. Consider independent financial advisors like "Melissa Terri Swayne" I've worked with her since the pandemic and highly recommend her. You can check if she meets your criteria.
Hello, I am due for retirement in two years, I'm a senior citizen but I'm curious to know best how people split their pay, how much of it goes into savings, spendings or investments, I earn around $50K per year but nothing to show for it yet.
In this current unstable markets, It is advisable to diversify while retaining 70-80% in secure investments. looking at your budget, you should consider financial advisory.
I think you're better off with majority investment in S&P500 and uprising equities cos they always outperform. Also speaking with an advisor can help with pointers. I've been in contact with one I reached through commentaries here, she has been really helpful.
impressive gains! how can I get your advlsor please, if you dont mind me asking? I could really use a help as of now
"Rebecca Nassar Dunne" is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
I’ve always spent less than what I made. I’ve always paid myself 1st. by using payroll deductions. If I got a raise I increased the pay roll deduction. I never went down on the deduction until I reached 59 and I started at 30. I decreased by about 50% I took more vacations that year and inflation caught up to me. I never borrowed against the funds.
Thank you for clarifying the second 5 year rule dealing with Traditional to Roth IRA conversions. I am 67. I have had my ROTH IRA for over ten years so rule 1 is satisfied. I plan to convert some of my traditional IRA to my ROTH IRA. So now that I am well over 59 1/2, and my ROTH IRA has been open for over 10 years, I will NOT, NOT have to wait 5 years after every Traditional IRA to ROTH IRA conversion I now make.
It is amazing on so many of the online searches I tried, even reading the IRS publications how they skip over or do not address that rule 2 about conversions after age 59 1/2 .
When I was 26 and had just begun to save for retirement, my employer hired a consultant to teach retirement workshops. Their main recommendation at the "The Kids Table" program was to choose a retirement fund goal that corresponded with your 65th birthday. Twenty years have passed since then. I've only ever made one investment. What else can I do to improve my finances?
In addition to making me a multimillionaire, target date funds saw a 40% decline in a short period of time and a protracted recovery period. To avoid blunders, my best recommendation is that you seek the advice of an experienced counsel.
There are so many choices to make, and for beginners, it's often best to entrust daily investment decisions to an experienced advisor.
On the contrary, even if you’re not skilled, it is still possible to hire one. I am a project manager and my personal port-folio of approximately $750k took a big hit in April due to the crash. I quickly got in touch with a financial-planner that devised a defensive strategy to protect and profit from my port-folio this red season. I’ve made over $150k since then
I agree-having an advisor manage my investments has been invaluable since my work schedule doesn't allow time for in-depth analysis. Thankfully, my portfolio has grown fivefold in just four years, reaching nearly $1 million today.
Could you kindly elaborate on the advisor's background and qualifications?
@WiseMoneyShow - Wow! There seems to be a lot of confusion around the 2nd 5 year rule - does the 5 year rule matter on a roth conversion after 59.5! It makes sense that it WOULDN'T matter and that was my logic trying to get answers from people or even googling and they were saying it still needed a 5 year waiting period for each year converted! You have been the 1st one to explain it perfectly! So thank you!
A guy asked if he should take a HELOC for a home renovation. I said, "I wouldn't," and suggested saving instead. He didn't reply. Many homeowners are surprised by the idea of saving money instead of using home equity for projects like a backyard deck. I chose to save and invest in the stock market instead, which has helped me build long-term financial stability without taking on additional debt.
What advice would you give to someone new to investing with around $80,000 to begin with?
I believe a healthy portfolio has 3 things, at the bare minimum: Exposure to ETFs for increased diversification, Exposure to assets that generate cash flow like dividend stocks, Exposure to market-leading tech.
Hello, I'm interested in trying this out. Who is your advisor, and how can I contact them?
Thanks for sharing. I curiously searched for her full name and her website popped up immediately. I looked through her credentials and did my due diligence before contacting her.
people are creatures of habit and learn that it is normal to have a mortgage. When that mortgage is gone they literally feel like that void in there payments needs to get filled. It's actually abnormal to fill that void with savings, as it's something foreign to the majority of people.
Thank You!!! This was certainly the best explanation of the 5-year rule and the two parts. The second part was most important to me and frustratedly unfair and unclear to me. But you have enlightened me on the second part of the rule as it relates to conversions. Age 59.5 is the key as it relates to Roth conversations, once that mark is met all that money is usable at any time. Thank you Sir!!
@thomasridley458 - one of the things I got, was once you've been investing I nto a Roth IRA for more than five years, after 59.5 years of age, any money invested becomes distributive.
However, if you've had the Roth IRA for more than five years, and you're over 59.5 years old, if you take the money right out, then it hasn't even had time to earn any interest, so there's no real benefit
So let me make sure I got this straight:
1) You can always withdraw your initial contribution so long as it wasn't from a roth conversion. Age of person and roth don't matter for that.
2) You can only withdraw your earnings once 59.5 AND if you've had a roth IRA at least 5 years, again ignoring conversions
3) If you convert to a roth, 5 year rule applies to each conversion year until you are 59.5, and this applies to both the initial contribution and earnings
Did I get that right?
Re your question 3: I just rewatched the video, and around 5:20 he said even if you are 59.5+, you still need to have opened your first Roth IRA at least 5 years prior. He specifically mentioned taking distribution of the converted BASIS, so I'm not totally clear on distributions that include any growth from the converted dollars.
@@lynnebucher6537 thanks.
That is the best explanation of these crazy rules that I've ever heard. Thank you.
Two five year rules (well 3 if you include inheritance) and two "penalties" 1. income tax 2. 10% early withdrawal. Complicated indeed and there are many sites out there that get this wrong. This video is 100% correct. Always cross reference info on the IRS website as that is the final word on the subject.
I agree with your comments, BUT not all CPA's and Financial Advisors are thoroughly up on all the specifics of Roth accounts and Roth conversions. I have recently completed our series of Roth Conversions and have purposely not converted every last penny into our Roth accounts. What has greatly helped us was having a cash reserve for the taxes and always having an avoidance to most debt. Sure some of the recent mortgage rates have been wonderful and I can appreciate how nice it'd be to have one(if I needed one). 50+ years ago I inherited $3500 from my grandfather that was meant to be for college. I got my degree while also working and I still had that chunk of inheritance. My parents chose not to bequest money to their grandchildren, so I decided to open Roth accounts for our children and one part time working teenager. Like a teenager, college impo9rtance is not always understood, but I trust there will be a time when my heirs will appreciate my efforts!
1) You can always withdraw your initial contribution so long as it wasn't from a roth conversion. Age of person and roth don't matter for that.
2) You can only withdraw your earnings once 59.5 AND if you've had a roth IRA at least 5 years, again ignoring conversions
3) If you convert to a roth, 5 year rule applies to each conversion year until you are 59.5, and this applies to both the initial contribution and earnings
Did I get that right?
@@consciouscrypto3090 1) Yes contributions are always available for withdrawal without any penalty, BUT the IRS expects you to track/report it for certain withdrawals before 59 1/2 on Form 8606 - Part 3. They want to make sure you aren't withdrawing anything that's subject to tax or penalty. 2) You are correct, but to clarify you CAN withdraw it, BUT you will be subject to tax and penalties. 3) This one gets weird. Conversions are NEVER subject to taxes (you already paid taxes upon conversion), only the 10% early withdrawal penalty applies if before 5 years (for each conversion) and before 59 1/2. This is why that penalty goes away completely after 59 1/2.
Sounds correct!
@@consciouscrypto3090No. The IRS classifies Roth money three ways. 1) Contributions. 2) Conversions. 3) Earnings. It also expects withdrawals to follow the SAME order. Therefore, both contributions and conversions can be withdrawn tax-free at any time and any age BECAUSE taxes on those funds have already been paid. Earnings, however, are subject to taxation until the IRA account has been open 5-years and until the account owner has reached age 59.5.
Best roth explanation I've heard. TY
Agreed!!
I’m 52 and investing for the first time in my life. I have started contributing to my 401K and opened a Roth IRA with automatic contributions, but my question is, does asset allocation really matter at first, or perhaps I am just overthinking as a beginner?
There’s a lot to decide on… most times it is better as a beginner to delegate your day-to-day investing to a well experienced advisor
I'm in line with having an advisor oversee my day-to-day investing cos, my job doesn't permit the time to analyze stocks myself. I got fully invested since the covid-outbreak, and thankfully, my 6 figure portfolio has 5X in barely 5 years, amassing nearly $1m as of today.
good gains! who is the professional guiding you please? enthused about investing for my eventual retirement but dont know how to go about it, for now I only invest in my 401k through my employer and gains are quite slow
Rebecca Lynne Buie is my FA. Just google the name and you’d find necessary deeds to work with. To be honest, I almost didn't buy the idea of letting someone handle growing my finance, but so glad I did.
thanks For clearing that up, I curiously searched for Rebecca Lynne Buie on the internet and thankfully, I came across her my goal is to retire in 5years time.
Thank you. This really cleared up the rules. Retiring next spring at 55 and then 59.5 here we come!
Best explanation for Roth IRA rules I've ever seen.
No Kidding! Cuts right through the crap. I wish I could find someone like him in Phoenix... Most of the people I talk to are only interested in getting my assets under their management so they can pay off that new BMW... 😞
@@elgrancabron It's not only Phoenix.
We obviously could use a definitive rule from the IRS on Rule #2, but your analysis is very logical. Thanks.
Yes there are many little rules and have been delays in providing some of the rules as well. When a Roth account is inherited by a non-spouse, or when the non-spouse beneficiary dies and a contingent beneficiary inherits the contingent may not have their own 10 year time period, and perhaps the balance of the original beneficiary's 10 year period. Always pay to be informed!
There is a spreadsheet in their online retirement income instructions.
This video is excellent. I asked my advisor about the 5-year rule and didn't get an answer. This answers all my questions and clears up a confusion I had about the 5-year rule.
I had no idea about the 1-year rule for the kids. That sounds awesome.
Buffet was also selling when the pandemic hit, a great entry point for people of my generation (30s, 40s) and a great period for stocks overall. My question is do you think it's a good time to consider selling some stocks too? I’m considering rebalancing my $2M portfolios and curious for the best strategies to do so.
Even with great opportunities, we should proceed cautiously. Seeking market analysis or advice from certified market strategists is important.
@@AlbertGReene-p8w I agree. Exactly why I now work with one. A lot of folks downplay the role of advisors until being burnt by their emotions, no offense. I remember some years back, during the covid-outbreak, I needed a good boost to stay afloat, hence researched for advisors and thankfully came across one with grit. As of today, my cash reserve has yielded from $350k to nearly $1m.
Good info, my husband is 68 has had a roth for 5 years we plan on adding small conversions. I wondered why we couldn't use it just like a tax free cash account. Dip in when needed, yes we can somewhat.
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got talking about investment and money. I started investing with $120k and in the first 2 months , my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and gets more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second daughter. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks.
@@BennettElizabth Quitting may not be the best approach if you ask me. This is where an AI comes into the picture. I barely have time to trade myself as my job swallows up most of my time. *MARGARET MOLLI ALVEY*, a licensed fiduciary whom has made me over 5 figures in profit in less than seven months, handles my investments. I could leave you a lead if you need help.
@@EmilyEvelyn-90 Oh please I’d love that. Thanks!
@@BennettElizabth *MARGARET MOLLI ALVEY*
Lookup with her name on the webpage.
Thank you for this great breakdown of the mysterious Roth rules, great video!!
I recently retired at age 65
I went from a NYSDCP into a standard IRA
With a Roth IRA as well.
I have been converting my IRA into my Roth IRA periodically to minimize my tax burden.
I have not yet reached the initial "Five Year Rule"
The overall balance has been remaining fairly constant, even paying the taxes with annual conversions
Penalities exist if you withdraw before 59.5( i have done it )..lost the savers credit for 3 years when i took $600 out when i had a surgery,,i figure it cost me more than $600 lost savings ....2. I have a co-worker whom asked me about opening a Roth and doing conversions( he just turned 60 and his wife also)....good info
I'm 60 and have a Roth IRA over 5 years, if i start a Roth 401k with my company how does the 5 year rule apply to the 401k?
THANK YOU for clarifying this. I spent hours the other day trying to figure out if I needed to keep each conversion in its own separate account.
I was aware of the second 5 year rule but not the first five year rule. And the reason is because I did a conversion many years ago. It was a small one but it was in my mind a security blanket kind of decision. That security blanket I thought I needed never came to fruition but now I have a Roth IRA because of it so when I retire I can move my Roth 401k into that IRA and I don't have to wait 5 years to touch any of that money? That's what I heard him say
I thought I was following, but the last bit of information threw me off a little:
If I plan on retiring at 60 and most of my savings are in pre tax 401k…and I choose to do a Roth conversion at 61, 62, 63…using my low-income years before social security to do my conversions to minimize my taxes…the Roth conversions I do after 59.5 aren’t subjected to the 5 year rule, right?
However if I did conversions all the way up to age 59…THOSE conversions would need to wait five years each? (Double checking, ha!)
Thank you for the info!
Once you reach 59 and 1/2 and you have had ANY Roth IRA open for at least 5 years, then all distributions are qualified and tax free.
Solid video, so much conflicting information on this online!
With Roth IRA, the money you are contributing has already been taxed. At any time for any reason, you can withdraw your contributions tax-free and penalty-free. Additionally, any earnings on investments can also be withdrawn tax-free and penalty-free, Not sure how much to contribute, I'm still at a crossroads deciding if to liquidate my $338k stock portfolio.
For the average person, the strategies are fairly demanding. In actuality, most professionals who have the necessary abilities and knowledge to complete such occupations do so successfully.
I agree, that's the more reason I prefer my day to day investment decisions being guided by an advisor, seeing that their entire skillset is built around going long and short at the same time both employing risk for its asymmetrical upside and laying off risk as a hedge against the inevitable downward turns, coupled with the exclusive information/analysis they have, it's near impossible to not out-perform, been using my advisor for over 2years+ and I've netted over 2.8million.
How can I reach this adviser of yours? because I'm seeking for a more effective investment approach on my savings?
'Carol Vivian Constable, a highly respected figure in her field. I suggest delving deeper into her credentials, as she possesses extensive experience and serves as a valuable resource for individuals seeking guidance in navigating the financial market.
She appears to be well-educated and well-read. I ran an online search on her name and came across her website; thank you for sharing.
Just to be clear. After age 59.5, If I roll over money from my 401k into my roth IRA that I've had for more than 5 years, I do not have to wait 5 years to use that money, correct?
since you're both over 59.5 and have had Roth IRA for 5+years..then you have no constraints on taking money out 8:58
I asked and want confirmation on this as well
@@3piloteach conversion has a 5year rule. I read the IRS literature on it. My understanding is that the money you paid tax on is available immediately but the earnings are under the 5year rule.
@@DunRovinRanch-1969 doesn’t apply after 59.5 tho
@@DunRovinRanch-1969instead of reading the paragraphs, look at the flow chart. It is easier to understand.
Question: if we convert traditional IRA to roth in age 60 (of course paying the taxes during conversion), and withdraw next day from roth ira, why the 5 year rule should apply.? My understanding is that one has to wait 5 years to withdraw the gain ; not the contribution...
I had these straight in my head already. Glad I've been paying attention and learning. :)
What about TSP or Roth TSP? When I retired, I rolled over my TSP and Roth TSP to a Traditional and Roth IRA. Does this 5 year rule still apply?
I started mine late at 57 years ago i will not have access until 62. But at 59.5, I can start converting some of my 401K money over. I had never heard of that 5-year rule until i opened my account. Nice explanations, though.
Good video covered all the bases on the 5 year rules.
Outstanding! This is the kind of common sense information I need! How come I can't find someone like you around here? I keep interviewing retirement/financial planners that don't know everything I do... 😞 I guess the only problem I have now is when and how much pre-tax IRA investments should I convert. Right now I'm told if I convert too much my taxes will be through the roof even though I'm retiring...
Thank you for this info. I have two Roth IRAs at different brokerages, and I thought each one had to be 5 years old before I could withdraw from it. Glad to know that as long as one of them is 5 years old, I can access both.
*_Contributions_* to Roth IRA has no 5 year wait
Must needed info and clarification. Thanks.
So if I have Roth1 held over 5 years and now I open Roth 2, Roth 2 doesn’t have to wait 5 years? I’m over 59.5.
retired at 60 with $750K in my 401K and IRA's. My wife and I did just fine in expensive Bergen County, NJ by living within our means. Home was paid off. No car loans. By withdrawing bare minimum, our health insurance costs were almost non-existant due to Affordable Care Act subsidy. SS kicked in at 62. Medicare at 65. Six years later, my IRA balances have grown to $850K and now my wife is turning 60 and her IRA's are now available. Anything is possible if you live within your means. Merry Christmas!!
I plan to retire at the end of 2025 at 62 after 36 years in Telecom as a sales engineer. My wife will retire in May 2026 and she's loving life! But walking away from a good income stream and building the nest egg to living from the nest egg is a scary proposition couple with the alarming recession and CPI report
@@SheronKoss I feel your pain mate, as a fellow retiree, I'd suggest you look into passive index fund investing and learn some more. For me, I had my share of ups and downs when I first started looking for a consistent passive income so I hired an expert advisor for aid, and following her advice, I poured $80k in value stocks and digital assets, Up to 200k so far and pretty sure I'm ready for whatever comes.
@@AlyshaDachs How can I reach this adviser of yours? because I'm seeking for a more effective investment approach on my savings.
@@SheronKoss The advisor am currently working with is Allison Camille shaw. i came across her in a Bloomberg interview for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look her up.
@@PhillipBridge-j5z Thanks a lot for this recommendation. I just looked her up, and I have sent her an email. I hope she gets back to me soon.
The roth was opened by accident so i converted it that same year to a traditional for tax reasons. It still has one cent in that roth so is it still considered the 5 years still even if it just has 1 cent in it and i restart adding money in it now.
Not sure if he really clarified the difference between original conversion amount vrs the gains-interest-div cap appreciation of the original amount. I understand that if you convert ira to Roth over 59.5.. you can take out the Basis.. or original conversion amount ... anytime.. no tax no penalty.
If you’ve had the Roth for at least 5 years, then you can also take the gains tax free after the conversion, over age 59.5.
I had the same question about earnings, only because a little after 5:20 he mentioned BASIS specifically in his example where person was over 59.5 AND a Roth had been opened at least 5 years prior.
Thanks!
1. Open Roth IRA now for 5 yrs rule( holding Roth IRA does not qualify)
2. Roth conversion is taxable
3. Inherited Roth IRA- now you have 10 yrs after date of death to withdraw those Roth balance
What do you mean holding roth ira does not qualify?
Holding a Roth *401K* doesn't count towards any 5 year requirement. You must have opened your first Roth *IRA* for at least 5 years to satisfy that rule for withdrawing converted funds out of a Roth IRA.
I have an $800k portfolio from my old job and retired six years ago. Lately, it’s been doing poorly, with only 6% growth in the past three years and I feel stuck. I desperately need to revamp my investments. Any advice on what to do with my money would be greatly appreciated.
This is what people that handle their p0rtfolio themselves go through. I will advice you get yourself some fiduciary advisōr to help you make better p0rtfolio decisions.
I agree, investing with the help of an advisor set me up for life with about $1.6m currently in stock portfolio. I max out my 401k and have few properties. I worked hard as a language tutor for 32 years, and my salary was just over 80k annually. It all boils down to consistent regular investing to minimize risks and maximize growth.
I'm interested in trying this out. Who is your advisor, and how can I contact them?
I'm cautious about giving specific recommendations since this is an online forum and everyone situation is unique, but I've worked with "Melissa Elise Robinson" for years and highly recommend her. Look her up to see if she meets your criteria.
Thanks for sharing. I curiously searched for her full name and her website popped up immediately. I looked through her credentials and did my due diligence before contacting her.
You just contradicted yourself on the Roth conversion after 59 1/2. Does each conversion start a 5 year clock?
Let's be very clear. Suppose you convert 10K into Roth. Can you withdraw that 10K anytime out? Does the 5-year rule apply to that principal or just the "growth" (or gain) from it? You already pay taxes on that principal when you convert.
Does the roth creation have to have money in it to start the 5 year counter, however small? Or can you just create it with a zero balance and then 5 years later it use it.
So? Rolling over a portion of my roth 401k to a roth ira that is 7 years old, can I pull the rollover amount tax free?
my first Roth I have had now for more then 5 years. I started a new job 1.5 years ago, and started a new 401k and 401Roth account. I am 61 now. I contributed 10k to the Roth new account and now have about 40k in it from gains. Question , do I pay a penalty if I take out these gains in my Roth that I opened a year and half ago?
I started my Roth/401K at the age of 60. Do I still need to wait 5 year rule before I can withdraw my money? Also, I am thinking of converting some of my savings from 401K to Roth/401K and I will pay the taxes, do I still need to wait 5 years to withdraw my money from Roth/401K? Thanks in advance for the answers.
Hello, I've been intently watching retirement videos recently as I'm looking at retirement in 5 years (now 58). This is the first I'm hearing about a 5 year rule. I've been contributing for years in my 401K and started many years ago also contributing to my 401K Roth account. Are you saying I need to get a Roth IRA account set up ASAP? Also, if I do put $100 in a Roth IRA, after the 5 years, can I take the growth from my Roth 401K without penalty since it's not doing a conversion, it's just a withdraw from a Roth account?
Do Roth IRA distributions count as income for Social Security and/or Medicare IRAA??
I have not been able to contribute to a Roth IRA due to income limits.. you implied however I can open a small one anyway. Can someone explain what that means? I would like to do that if I can get the 5 year thing out of the way. 🙂
It's *back door* Roth IRA process: contribute $7,000 to traditional IRA and then convert that $7,000 t-IRA to $7,000 Roth IRA. Caveat, pro rata tax rule applies if you have current traditional IRA from years back. Pro rata can be avoided if you have traditional 401(k). Do you already have t-IRA and if so do you have 401(k)?
I moved 401k to ira and converted to roth this year. If I wait 5 yrs I will still be less than 59.5 . Will I able to take just the converted amount before 59. 5?
So are you saying contributions to the Roth inside my Federal TSP doesn’t satisfy the first test?
Is the 5 year plan the same for Roth IRA and Roth 401K?
I have a small amount of money characterized as a ROTH 401K. Does that count for the 1st 5 year rule? i want to move that money into a ROTH IRA, then start characterizing traditional 401K money into a ROTH IRA. Did both 5 year rules start "ticking" when I characterized money as a ROTH 401K?
Let's say I am 60 years old and currently have $50k in a Roth IRA. I also have a regular IRA with $50k in it. If I do a Roth conversion on the $50k regular IRA and put it into my existing Roth account, do I have $100k that I can withdraw at any time?
@cometcal2
I'd say it depends when you first contributed to the Roth IRA. If it has been more than 5 years since you first contributed to the Roth IRA then YES you have $100K you can withdraw tax free/penalty free (assuming you paid the taxes on that rollover with other funds not part of the conversion dollars).
if it has not been 5 years since you first contributed to the Roth IRA then the answer is NO
(based on what I got out the Wise Money Show video above ).
For example lets say you open and funded the Roth only 4 years ago.
Lets also say you contributed $7000 per year for 4 years.
Your contribution total is $28,000.
If your account balance is $50,000 then you have $22,000 worth of earnings on that 28K.
After you convert $50,000 from your Traditional IRA to your Roth this is what you have.
$28,000 of Contributions, $22,000 worth of earnings, $50,000 from the Rollover.
but you can only withdraw the $28,000 of Contributions + $50,000 Rollover dollars = $78,000 tax free and penalty free. I
f you withdraw more you will be hit with the 10% early withdraw penalty.
I think the 10% penalty would only be on the $$$ over 78K but I am not sure.
Someone please correct me if I am wrong.
@@FrankFrankie-55 I was told by the IRS that every conversion from a 401k or IRA to a Roth had it's own 5 year rule.
@@everettcalhoun8197Partially true, partially not true.
I'm 60 & took out $8,814 from my Roth 401 out and was charged $4,00.00 in taxes. Why?
I Have a question ? My company recently switched to a new 401k company and I have $6900 in the old ROTH 401K can I roll that over to my ROTH IRA that I have at my bank?
Roth funds can be directly transferred to a Roth UmIRA. Have your bank do the paperwork. Avoid “touching” the funds yourself.
Yes, like longgone said let the banks take care of the paperwork for the rollover.
You are very informative Mike , Thank you for your help
does the 5-yr rule also apply to Roth 401(k)?
Super helpful. Thank you
Let's say if you're older than 59.5, Rollover IRA to Roth conversion, still apply 5 year rule? I have Roth IRA contribution (each year contribution) 10 years ago. Each conversion apply own each 5 year conversion rule? It seems my CPA doesn't know about it well.
The 5-year rule for Roth IRAs is a guideline that determines when you can withdraw money from a Roth IRA without taxes or penalties. It applies in two scenarios:
1. Qualified Distributions of Earnings:
To withdraw earnings from your Roth IRA tax- and penalty-free, you must meet two conditions:
• The account has been open for at least 5 years.
• You are at least 59½ years old, disabled, using the funds for a first-time home purchase (up to $10,000), or deceased (in which case your heirs benefit).
2. Conversions to a Roth IRA:
If you convert funds from a traditional IRA to a Roth IRA, the 5-year rule applies separately to each conversion. This means the converted funds must remain in the Roth IRA for 5 years to avoid an early withdrawal penalty (10%), even if you are over 59½. However, the penalty applies only to the converted amount, not the earnings.
Each 5-year period begins on January 1 of the year you make the contribution or conversion, regardless of the specific date within that year.
I think you should listen again. If you have had ANY Roth for at least 5 years, your conversions are available at age 59.5 years.
Thank you for the great video… Answered some questions I had. But if my wife and I are making more than the allowable amount for a Roth IRA, am I still able to open up a Roth IRA for $100? Should she and I both open up to separate Roth IRA for $100 so that we can have them open for five years in order to access, the Roth in my 401(k) at retirement without waiting five years?
Also, with my money in the 401(k), both traditional and Roth, do I have to convert that in order to access the money? Or can I simply withdraw from those accounts? Not understanding the pros and cons of converting either out of the 401(k) as opposed to just drawing from where it is now. I’m sure I’m missing something…
What about a roth ira rollover? Are those funds subject to a 5 year waiting rule at age 59 1/2?
Very informative thank you ❤
If you have a seaskndd Roth Ira account, which is not the sccount you are drawing from, and you are over 60, are you ok to withdraw?
So say I transfer $10,000 to a Roth IRA account that's already met the first 5-year rule. Will even that principal amount (not the interest) of $10K be subject to tax if I withdraw it from the Roth before it's been there for 5 years?
Basis (IRS language for cost) can be withdrawn from a Roth at ANY time with no tax due. This means any “regular” contributions made to a Roth. It also includes CONVERSION dollars added to a Roth.
Both five year rules were written to prevent “loopholes” from people avoiding tax. So the only amounts subject to taxation are earnings and growth and pre-age 59.5 withdrawals that include earnings and growth.
I’m confused.
I’ve had a Roth IRA since 2019 that hasn’t had any deposits since that first year. It’s just over 5 years ago.
I have an IRA converted from a 401k from an employer, and I’m 61 now. Are you stating I can convert that into a Roth IRA now and I don’t have to wait 5 years before withdrawing those funds?
I’m considering converting a “small” amount each year into a Roth to avoid taxes (I have no taxable income). Would I be able to withdraw those funds let’s say “next year?” I wouldn’t have to wait 5 years? I would suspend converting for that year of the IRA during the year of withdrawal to further avoid any taxable event.
I know I’m being very specific, and I have plenty of nontaxable funds to live on otherwise. Is this a question I need to contact you on or can you answer here? I don’t do very well on the phone. I’m on the spectrum (ASD).
There is a flow chart in the IRS publication that addresses how retirement income is taxed or not taxed. The flowchart is much easier to understand than RUclips videos or the actual written paragraphs in the IRS publication itself.
Excellent, to the point and clear. Thanks!
Is it advisable to make a “new” Roth account with each conversion? Or can I combine each rollover into the same account? First was done 10 years ago. I’m over 59.5. The fund in my Roth is closed to new investors so if I fund a new account, I will be unable to purchase additional shares.
Depends on careful record keeping. I have a SINGLE Roth account, and just track my 1) contributions, 2) conversions, but do not worry much about “earnings” because the default method the IRS uses in its formulas is contributions, then conversions, then earnings when distributions are taken out.
Thank you very clear presentation
If I’m 100 % permanent and total disabled through the VA. Do I need to wait until 59 1/2?
Read IRS publications number 590-A. There are exceptions for disability, but you need to read to see if you qualify.
I have a IRA question. My wife took out a distribution from her IRA in the calendar year she was 59.5 but the day she withdrew it out on the particular year of that same calendar year she was technically 59 and not reached the 59.5 until later that same year. Does the 10% tax penalty happen for that withdraw? She messed up but hopefully since she turned 59.5 that same calendar year, the penalty doesn't apply. Thanks for the response.
She is subject to the 10% penalty because she took the withdrawal BEFORE she turned 59 & 1/2 years old.
Roth 401K isn’t the same as a Roth IRA? I converted my post tax contributions in my 401K to a Roth. The clock doesn’t start until I quit my job and move it to a Roth IRA? Thanks, D.
Can I withdraw @10K from a Roth 403B with no penalty if I use the funds to buy a house as a first-time home buyer and I am not 59.5 years old? I left my employer last year but have not rolled over the Roth 403B from the financial institution.
I had an old 401k and my wife had a simple ira, from our previous employers. When the market tanked a few years back, I think around January, our CPA suggested it was a great time to covert them to ROTH IRA's. Pay less taxes, when there is less money! Our ROTH's make up about 40% of our retirement(most in current company 401k), but i'm still nervous we won't have enough in ROTH and HSA. But as our side business takes off, I want to put half the profits into a brokerage account for early retirement and rainy day use. I feel like that gets tricky with W-2 and 1099, for taxes. 1099 only would be a lot easier to have lower NET income.... But I guess I do have about 20 years to figure it out still... ha
$7k Roth IRA * 2 spouses * 20 years = $280,000 Roth IRA contributions
The first 5 year is for contributions, He said do a small conversion, "even if its $100" to start the clock. This is incorrect. You need to contribute to a Roth to start the clock on the 1st 5 year rule.
He said this in the context of someone who makes too much money to contribute (start) a Roth account. This is another way to start an account. He was correct in this.
Caveat to point he said, Roth 401k money let's say has been made 5 yrs ago...rolled to Roth IRA CAN meet the 5 yr rule upon rollover if the record keeper of the 401k simply reports the date of first Roth contribution to the IRA provider u selected. So it's worth asking ahead of time if the date will be reported. Fyi.. ideally though as he said it's best to just start a Roth IRA at any age prior to 5 yrs from retiring so u have it all covered.
Question: I withdrew a large sum from my IRA ( after withdrawing RMD) this February . I didn’t withhold any taxes at the time, can I pay the amount of taxes owed next year when I do my taxes or do I have to pay any amount sooner. I’m 75 .
I did a Roth conversion with that money.
You have to pay estimated taxes on your money as a senior. So when you do a Roth conversion you have to pay estimated taxes. But the IRS wants you to pay estimated taxes on an equal basis basically for the four quarters of the year. If you use the amount you paid in taxes for the previous year and use that amount quarterly paying your estimated taxes that's called safe harbor and your large conversion won't matter, because you're under safe harbor and your pain the IRS what you paid in last year's tax returns total taxes. Then when you file your tax return and you owe more money on the conversion you just pay the money with your tax return. If you're not paying estimated taxes you'll end up getting penalized when you pay your taxes with your tax return.
If you wait to pay the taxes due when you file your tax return, the IRS will charge you an extra penalty for “underpayment” if you do not send in estimated tax payments each quarter.
Clear at the beginning but getting confused at the end.😅
I inherited a traditional IRA I took out 22k, after a month and they held 10%(federal) of the withdrawal a little over 2k..... i know i am going to have to pay more taxes on that withdrawal but does anyone know how much more?
Your tax depends on your total taxable income. Nobody can answer your question unless they saw ALL your income.
I thought the second five year rule is a penalty on just to the growth of the funds after the conversion, not the entire amount. Growth over 5-years can be very little or a lot, but you've already paid the taxes on the principal, and that is not penalized.
Nice I retired at 53 rolled my ROTH 401K into a ROTH IRA now I’m 59 will be 59 1/2 voilà 5 year rule met! But I was allowed to take the principal out before the 5 year point.
No mention of an income limit for Roth.. i was going to open a Roth IRA to start the first 5year rule but I make too much money to be able to open a Roth. I have ROTH 401 and traditional 401K but wanted to start a Roth IRA to get my 5 years in.. i will likely start converting at some point to Roth IRA as I dont think I can convert to Roth $01 from traditional
Are you familiar with *_back door_* Roth IRA process? Do you have traditional IRA balance?
@@alrockyyes thanks, just completed a back door Roth. With my Robinhood account
IF I (+65 yo) have to make a mandatory distribution from my 401k (non-Roth), and if I deposit the distibution to my Roth (Established >5 years ago) will I avoid taxes on the distribution?
No
You could rollover the non-roth to a Roth but you would need to pay taxes on the total amount of the rollover as if it is income. Then going forward there would be no required min distributions.
I don't believe you can use rmd money to convert to a Roth. I believe that money would have to be used or put into a brokerage account. After you take your rmd, if you are at the age that you must start doing that, and if you want to then do a Roth conversion, then you have to take more money out after the rmd and do the conversion of that money. Then you will pay taxes on the rmd amount and the amount you converted.
I plan to retire at 65. I will have my Roth IRA over 15 years by then. Is there a time limit to start withdrawing?
Not in your life time. But your beneficiaries will a time limit.
To do a Roth conversion, do you have to have a W-2 job? Can you setup a Roth after retirement? After you retire, you no longer receive W-2 tax forms. Did I miss something?
Not to do a conversion from a 401k or IRA. Contributions are a different story. You can do conversions but cannot do contributions unless you are not working.
1) W-2 forms are NOT needed to do Roth conversions. 2) You can open a Roth IRA after retirement.
When dollars are in funds/shares, that 15-20-25-35% income tax rate could challenge the Roth being a better option. Look at your tax brackets what rate you expect when retiring. You might be paying a higher rate now than in retirement. In my case traditional IRA/401k and maximizing shares purchased during my working years has more "shares/dollars" working for me. Just speaking about dollars vs the actual dollars in shares of a fund can be a missed opportunity when you have pretax dollars working for you for a longer period.
You should read about 1) IRMAA penalties-which are hidden taxes that get deducted by social security to cover Medicare costs; and 2) RMD’s (IRS mandated required minimum distributions). In many cases, Roth accounts are preferable to “regular” IRAs.