Anyone converting to Roth while market is down?
- Thread starter ruxCYtable
- Start date
I've always done roth with my 401k and IRA. Now is a great time to buy.
When I got my first "real" job, roth 401k wasn't a thing, and I've just always continued to invest pre-tax. If the market tanks again I think I will jump on the opportunity to convert. Just hard to know where the bottom is.
i just pump $500/month into my roth and let er' ride.
I'm single, co-own a biz taxed as an S-corp, and have a 25 year old rollover IRA from my 401k. If I converted that, it would almost all be at the 37% rate, plus Iowa at 8%. Murderous. I think prefer to pay the tax on the gains later once I retire.
I just say this to prove the old saw "your situation may vary"...
I just say this to prove the old saw "your situation may vary"...
So do I.. or even college-- 20/21. Even if you were doing $100/month.
I got in when I was 25.
Probably the luckiest thing that happened to me was my then boss started a 401k plan at our company when I was about 24, and just starting to make good money. I didn't know anything about stocks, funds, investing or anything related to personal finance (like most people). But the advisor did lots of education and I soaked it up. So I did get off to a good start when still young. Yay me.
The average person just does not understand how easy it is. Start young and consider that money as off limits. I worked in the workplace retirement biz for a while and people just kill themselves with 401k loans and constant "hardship withdrawals." It made me sick for them.
My wife and I both started by maximizing the company match. Then we setup an automatic 2% increase. Before we knew it we were both contributing over 20% and never missed it.
Similar for me. My first job out of college had a crazy good match. You put in 6%, they match with 10%. So, I was getting 16% of my income stored away all through my 20s. I did it because I got good advice to do it, but didn't realize how lucky I was. Very glad I did that now.
It does suck putting $500/month into the roth and basically seeing your account value stay the same haha.
This is how we are with our 529 as well. We increase it a little bit every year. We even tell family to cut their gift costs in half, and give them UPromise # for them to contribute to. GPA and GMA love doing that and our house isn't full of cheap crap. A $20 birthday contribution by an Aunt at age of 2 is going to be a lot to a college aged student.
It's like $60...
Hopefully you meant $20 per year for 16 years. Even then, it may cover a semester or so of books.
A Roth IRA is a retirement account, like a 401k or a Traditional IRA, but with a few subtle differences. The big one is that a Roth IRA contributions aren't considered pre-tax--so contributing to one doesn't lower your reported income at tax time. You also aren't taxed upon withdrawal of the funds during retirement, unlike a 401k or Traditional IRA, which are considered "tax deferred". Basically, pay the tax now instead of later.
Traditional IRA's also have required minimum distributions once you reach 70 or so, whereas a Roth IRA you can withdraw or not however you want.
I get all that but why is it beneficial to roll 401k into Roth when the market is down?
I mean in general if multiple people do that every year. Just a decent way to save money that is visually hidden to the kids vs them having a savings acct.