DH rolled his 401k from his old company to his new company 401k. He then withdrew $60k and we are converting that to his Roth IRA. We decided on $60k to max out our taxable income in our 25% bracket. We might as well since we are at that level and going forward I suspect it'll be higher so converting any IRA or 401k money to a Roth IRA will likely not be worth it.
I've been doing a lot of thinking about some saving goals I have. My car is 2010 which isn't old and it only has 90k miles on it bought new. But I'm thinking maybe in 3 more years when it's 10 years old maybe we'd get another car and maybe it's time to start saving so we don't have payments? $500/month for 3 years?
I also think we need to start increasing our college savings. $2k/year per kid doesn't seem like enough. I'm thinking if we increased it to $4k/year per kid that would put us in a better position. It another $325/month for both kids.
I guess since 2017 is about to start it's making me evaluate financial goals. Once we buy a house and settle into a routine monthly budget I think it'll be easier to give every dollar a name.
Have you considered your 2017 financial goals?
Roth Conversion
December 6th, 2016 at 05:28 pm
December 6th, 2016 at 05:34 pm 1481045656
December 6th, 2016 at 07:06 pm 1481051194
December 6th, 2016 at 10:23 pm 1481063017
You are smart to save now for a car. We try to do that for many items. We have quite a few different savings accounts for different things we save for. It helps us keep track of how much we have saved.
December 7th, 2016 at 10:47 pm 1481150878
Of course moving income into a tax-free bracket is always good if you can afford to do so; and especially if you can pay the taxes on the conversion from moneys you have OUTSIDE of the IRA account rather than decreasing your money.
As to the comment above about high earners and regular vs Roth IRAs, note that most high income people cannot make a traditional IRA contribution; the ability to do so is phased out for incomes between 98K-118K MFJ.
December 7th, 2016 at 11:18 pm 1481152734
December 11th, 2016 at 06:33 pm 1481481222