Investing for Retirement Questions Answered - 74

In YMYW podcast episode 74, Joe Anderson, CFP® and Alan Clopine, CPA answer questions about investing for retirement, covering investment options for 403(b) accounts, tax implications of moving part of your IRA and how to avoid tax penalties when withdrawing from an IRA. Original publish date October 15, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed.

00:00 - Intro

06:30 - “If you have a 401(k) that has a Roth option, you can put $18,000 (per year) into that Roth 401(k).”

07:51 - “If you have a 401(k) that allows you to put yet more money into the 401(k) after you max out, some plans allow you to put after-tax money into that 401(k)... here’s why this could be such a good idea, particularly if you’re close to retirement…”

11:11 - “How should I invest my 403(b)?”

14:38 - “Our advice is always to maximize those (employer’s retirement) plans.”

22:05 - “What are the tax implications of moving a portion of an IRA to open a new IRA with a different firm?”

27:17 - “With a 401(k) by law it’s mandatory to withhold 20% in taxes if you do that with the 401(k).”

28:44 - “Taxes don’t stop when your paycheck does – once you start tapping that retirement nest egg for your living expenses, there are all kinds of new rules and opportunities.”

30:14 - “Will I be penalized for an IRA withdrawal?”

32:08 - “There is no age limit for Roth IRA conversions …so if you take money from your IRA and move it into a Roth IRA, there is no 10% penalty on that conversion. The IRS classifies that as a rollover. There would be a 10% penalty if you’re under 59 ½ and you withheld taxes when you did the conversion.”

32:36 - “Here’s another mistake: don’t withhold taxes when you do a conversion – pay the tax the following year in April when you do your taxes. If that tax bill is too high, re-characterize some, part or all of the IRA that you converted back into the IRA.”