Can someone point out if there's any flaw to this investing strategy?
I have been mainly contributing to a Traditional 401k, and only started a Roth 401k recently. My current ratio is 650k in a Traditional 401k and 85k in a Roth 401k (This is for a family of 2). We are both 38 years old at the moment and looking to decrease the amount of days working.
I was thinking that if we will do less contributions to retirement by the age of 40, that it is best to contribute to the Traditional 401k, and get the tax reduction now to invest into an individual brokerage, and after we decide to work less, rollover the Traditional 401k into a Rollover IRA, and then do a Roth conversion. I assume that when we do the conversion, the amount converted (say 25k) will be added into our ordinary income, which would be taxed at a much lower rate if we are both are planning on working less for the next 20 years?
Is there any flaw in this logic? We have 22k left to contribute for the year to our 401k, and wanted to see if I should contribute to my Roth 401k, or Traditional 401k to finish up the year.
Also, any strategic advise for cashing out my individual accounts? Most of my position I have been just buy and holding, and I'm not really sure when I should start chipping away at these gains.
We both still plan on working still to supplement any needed expenses.
Is there anything else we need to consider that I am missing?
Current Age: 38
Current Incomes: 450/day per-diem (health care)
Current Savings:
Individual Brokrage: 900k
Traditional 401k: 650k
Roth 401k: 85k
HSA: 58K
Current Debt:
Property 1 (Value ~1,000,000): 29075/year * 27 years = 785,025
Property 2 (Value ~1,000,000): 24445/year * 26 years = 635,581 (paying for parents)
Thanks! submitted by /u/z2iji
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I have been mainly contributing to a Traditional 401k, and only started a Roth 401k recently. My current ratio is 650k in a Traditional 401k and 85k in a Roth 401k (This is for a family of 2). We are both 38 years old at the moment and looking to decrease the amount of days working.
I was thinking that if we will do less contributions to retirement by the age of 40, that it is best to contribute to the Traditional 401k, and get the tax reduction now to invest into an individual brokerage, and after we decide to work less, rollover the Traditional 401k into a Rollover IRA, and then do a Roth conversion. I assume that when we do the conversion, the amount converted (say 25k) will be added into our ordinary income, which would be taxed at a much lower rate if we are both are planning on working less for the next 20 years?
Is there any flaw in this logic? We have 22k left to contribute for the year to our 401k, and wanted to see if I should contribute to my Roth 401k, or Traditional 401k to finish up the year.
Also, any strategic advise for cashing out my individual accounts? Most of my position I have been just buy and holding, and I'm not really sure when I should start chipping away at these gains.
We both still plan on working still to supplement any needed expenses.
Is there anything else we need to consider that I am missing?
Current Age: 38
Current Incomes: 450/day per-diem (health care)
Current Savings:
Individual Brokrage: 900k
Traditional 401k: 650k
Roth 401k: 85k
HSA: 58K
Current Debt:
Property 1 (Value ~1,000,000): 29075/year * 27 years = 785,025
Property 2 (Value ~1,000,000): 24445/year * 26 years = 635,581 (paying for parents)
Thanks! submitted by /u/z2iji
[link] [comments]