Pros and Cons of Rolling a Retirement Account Into an IRA - 84

Dividend paying stocks: do you understand how they work? Also in YMYW podcast episode 84, Joe Anderson, CFP® and Alan Clopine, CPA answer your biggest financial questions, from how to claim a loss on a Roth IRA to the pros and cons of rolling over an employee retirement plan into an IRA (individual retirement account). Original publish date November 19, 2016 (hour 2). Note that content may be outdated as rules and regulations have changed.

00:00 - Intro

02:04 “Most [people] don’t understand that when the dividend is paid, the stock price falls by that amount.”

04:55 “It’s not necessarily the best idea to focus solely on dividend paying stocks…with dividend paying stocks you’re paying taxes as you go.”

06:58 “It’s only a matter of time that the dividend stock prices go up because of demand.”

11:05 “I have a Roth IRA, open for over ten years now. I have contributed about $15,000 but lost about 80% of it due to some stocks that I invested in. Can I claim this 80% loss in my tax return?”

15:39 “I was recently told by more than one financial advisor that I should roll my employee retirement plan now that I’ve left the company, into an individual IRA. When I called that company to do just that, I was told by their advisor not to roll it over. He explained that I began investing in 2007/2008 when the market was low. If I were to roll over into an individual IRA today, I would be buying in when market prices are high, thus buying fewer stocks/bonds (whatever prices comprise the plan). He also said, since your plan has averaged a 5.1% gain this year, why would I want to lose that? Can someone speak to this logic for NOT rolling over?”

24:43 “Are profits from trading options (or stocks) in a non-qualified brokerage account subject to the 10.4% FICA tax?”

26:41 My wife and I are both 60 years old. We have taxable investments valued at $900,000, 401k and IRAs valued at $1,200,000, and a Roth valued at $23,000. We would like to retire in about 8 years. A co-worker said he heard that it is possible to pay no income tax in retirement, even on Social Security benefits. With my situation how is that possible?”

32:21 “A lot of people retire at 62 or 64 and are in a very low [tax] bracket, and could be doing Roth conversions all the way until age 70 1/2 and then be in a much better spot and in some cases pay little to no taxes.”