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I'm trying to see if I'm missing any accounts I should be contributing to while I go back to work for a few months.
Anything I'm missing?

401K work plan - Immediate vesting so at a minimum ensure max matching. I'm likely to try and do the whole $30,500 for people over 50 and put it into the tax deferred portion and not Roth since my income will likely to be lower once I stop working.

Individual Roth - This seems to be $8,000 ($7K+1K for those over 50). Also from what I've read I can also do one for my wife since she doesn't have a paying job.

Anything else?

Any Roth conversions will be delayed until a year when I have no income from a job.

Thanks
Rich

Can you do an HSA?

Can you do an HSA?

I don't think so because my health insurance is coming from the place I retired from and I'm declining health insurance from the new company. I'm assuming you need to be in a health plan that provides an HSA? (That makes sense to me but sometimes things work differently than what you think they should.)

Ugh. Going back to work? Hopefully it's because you want to, not because you have to. They'd have to offer me a LOT to make me go back. Two years, and I'm not bored yet. :-)

At first blush, it seems like you have it covered. Maybe Ray or intercst could add something.

Also, keep in the back of your mind the IRMAA for Medicare. I need to distribute mom's inheritance within 10 years, but really I only have about two or it will impact my IRMAA calcs.

any accounts I should be contributing to while I go back to work for a few months.
Anything I'm missing?

Looks fine.

My last year of work I put the max into my 401K. My takehome pay was pretty small, but we wanted to stuff the 401K as much as we could.

Max out the IRAs. Yours and your wife's. Doesn't matter if she doesn't work, she can contribute based on your income.

Roth vs. regular doesn't matter much in the big scheme of things. I suggest you balance them, to have as much in Roths as in regular IRAs. That comes in handy when you take withdrawals, allows you to choose paying tax on the withdrawal or not. sometimes you want a year's income to be taxed, sometimes you don't.

HSA? Wasn't really an option for me. My company didn't have an HSA until the year before we retired. Wouldn't have been able to put more than a piddly amount, so we didn't bother. I think you really need to be in it for several years for it to be worthwhile. At 65 you go on Medicare and if you have a good plan your out-of-pocket expenses will be small. I was 10 days in the hospital for a TIA and my total bill was $1500.

The benefits of Roth conversions is mostly illusion. It just changes which year you pay the tax, now or later.

I was watching a Kitces interview on youtube https://www.youtube.com/watch?v=7sUl_04g-CQ He was saying that many people get bored after a couple of years of retirement. He hasn't talked to me or any of my friends & neighbors. For us, 17 years and we still have not had the inclination to take on a job. Although a few people have volunteered to be golf course marshals---you get to ride around the course in a cart and get to play for free.

The benefits of Roth conversions is mostly illusion. It just changes which year you pay the tax, now or later.

The benefits everyone talks about are, but IMO, the biggest benefit can be no RMDs. It's all fine to say "In 10 years I won't be working so my income will be a lot lower than now", but if you're forced to take big RMDs, your income could be just as high or higher than now, and you won't have any real choice in the matter.

Brian

It's all fine to say "In 10 years I won't be working so my income will be a lot lower than now", but if you're forced to take big RMDs, your income could be just as high or higher than now, and you won't have any real choice in the matter.


Indeed. The primary benefit of a Roth is that you get to pick when you get the taxable inome, now or later. Touch choice, because you don't really know what your income status will be in the future.

You also don't know how your investments inside the TIRA and the ROTH will do.

I've come to the conclusion that it's just tinkering around the edges, doing a Roth conversion or not. Even the most optimal result is not going to be much difference overall. The math is straightforward.

As long as your current and future tax brackets are the same, or close.

And, of course, there is always the risk that they will change the rules and Roth distributions will be taxed. There is already a precedent, when they made Social Security payments taxable in 1984. "passed the Congress in 1983 on an overwhelmingly bi-partisan vote."

I dunno, to me it feels better to pay the tax when I am forced to (later), than to voluntarily pay the tax when I don't have to (now).

"to me it feels better to pay the tax when I am forced to (later), than to voluntarily pay the tax when I don't have to (now)

For married couples though, the choice is skewed towards paying now rather than later.
One spouse will eventually be filing single and the tax hit will be bigger.

having spent way too many hours on roth tools and studies, its seems a 50/50 split for roth and traditional IRA is a decent strategy in light of all the unknowns. (given similar investment options in both. there is chance the work you put in has a non-zero chance of retro rule changes.)

one caveat are stealth taxes like IRMAA and 'investment' tax, which fly under the radar of public complaints and thus increase exponentially and pass fairly easily in congress.
also, many forgot to include weighted probabilities for non-spousal inherited investments; even if roths, they have to be whittled away over 10 years into your taxable bucket.

since i have a lower income window visible via early retirement, i will try to get a 50/50 split before medicare, but no anguish regardless:

current trad:roth 8:1
shift ~25%/yr for 3 years into roth (based on available cash for taxes pre-conversion)

I definitely don't think I need to work but I thought it was now or never. It allows me time to catch up with an older relative I am close to. I doubt it will last long.
I don't think IRMAA will apply to us unless we inherit some money from that older relative and I don't like to plans for something like that. I've tried modeling numbers in a spreadsheet and it is possible but not likely at this time. I want to make sure I get my father's inheritance RMD's done before I hit 70 when I start social security.

Once I leave this job, then I should be able to maintain a low income for a few years and do some Roth conversions to further reduce the chance of IRMAA.

As someone else said, it is probably best to have something close to a 50/50 split (roth/tradIRA). I think some people are too obsessed with Roth accounts and will likely pay a lot more taxes to convert into Roths than they need to.

I have a small pension now (COLA), then both of us have very small pensions at 65. I'll take social security at 70. Not sure about my wife. I've used various calculators and get differing numbers. If she gets it earlier it saves us spending down the savings which might be important if I pass away first since that reduces my one pension by 50% and also my wife would only get my social security instead of us getting both.

Thanks.

For married couples though, the choice is skewed towards paying now rather than later.
One spouse will eventually be filing single and the tax hit will be bigger.

Yes, that's a big factor. Too many people don't think about that.

However, the family income & expenses drop. The smaller of the Social Security stops. Also their Medicare premium stops.

I want to make sure I get my father's inheritance RMD's done before I hit 70 when I start social security. - richinmd

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Keep in mind the two year look back for IRMAA. Your inherited IRA must be drained by the time you are 68 to avoid its RMD's impacting your medicare premium at age 70.

In my case, I have to dissolve mom's inherited IRA within 2 years as I will be eligible for Medicare in less than 4. I only inherited it last year.

Fortunately, our only income is dividends. No W2 income. But it is still going to be a tax hit.

“As someone else said, it is probably best to have something close to a 50/50 split (roth/tradIRA). I think some people are too obsessed with Roth accounts and will likely pay a lot more taxes to convert into Roths than they need to.”

I ended up at a similar 55%/45% Roth/TIRA split after conversions over the last 3 years post early retirement. Feels like a hedge and provides a bit more flexibility.

Thanks for this thread as I’ve focused on growth of assets much more than a detailed retirement plan and optimization of taxation in retirement. We are trying to shoot to stay within that 22/24% bracket and live relatively modestly. We had kids later than most, so we have that expense for another decade or but it’s so cool to be asst. baseball & basketball coach & play golf 2-3x/ week with a son who loves the game as do I. Been trying to expand my mind with more reading & music & even considering meditation beyond a bit more disciplined exercise regimen. Honestly, no regrets retiring a bit early from medicine after 30 years.

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