The Intersection of FIRE and Disney

[Frwinkley]

As in you'd put more funds into your 401k/IRA's or you'd do more Roth or? Would love to hear more about what you would do differently.

I can't speak for the poster you asked the question of, but we are hoping to do some Roth conversions while our income is lower (just pension income), prior to collecting social security.

 

[georgina]

As in you'd put more funds into your 401k/IRA's or you'd do more Roth or? Would love to hear more about what you would do differently.

Agree with Frwinkley that it is good to try to reduce the pre-tax 401k and IRA money so the required distribution at age 73 is not too big. Converting some to a Roth IRA each year can soften the blow. DH retired at 63 and didn't start taking social security until age 70, so we had 7 years of lower income to try to reduce the amounts. I didn't convert it, just made some withdrawals, same income tax is due either way.

DH worked for the same company for 37 years and had a large 401k, which we rolled into an IRA when he retired. His company's matching contributions were in stock. In my research I stumbled upon the Net Unrealized Appreciation rule for the stock, when you roll it all out entirely you only have to pay ordinary income tax on the cost basis, and pay lower capital gains rates on the rest when you sell it sometime in the future. So at the time of the stock withdrawal, we only had to pay ordinary tax on 20% of the value, as 80% was gain. Haven't sold any of it yet, but I've been using it for charitable donations so we don't have to pay any more tax on it.