ROTH IRAs.
- Thread starter Matt
- Start date
Yes, you are correct, I was thinking of it wrong. I was thinking more along the lines of self employed folk and need to stop that! Though there are some 401ks that can accept higher amounts (above the 17.5K) that then roll into Roths that work too, but certainly not all. I think that in part occurred because I was trying to figure out who would want to deploy this strategy in real life.
The thing I like about this concept from Fatwallet is the rollback. But I like that most for a harvest perspective, and we are losing out on it. I see an opportunity here if we could take this method and have substantially different investments, but I think it would be a real battle to prove that!
I mean, what is the point of having IRA 1 losing and IRA 2 winning? Why not have taxable losing and IRA 2 winning? If you are using derivatives why not use derivatives of substantially (different...) indices. EG DJIE and Russel 3000. The issue will always be the wash sale, but if you can navigate around that then there is some really interesting things here.
It's good thinking for sure, if for nothing more than theory and debate purposes!
Edit - Actually the above is something that I came up with long ago as a strategy (which is why I clung to it no doubt!) and in hindsight I remember the leverage aspect being hard to implement - I couldn't find a good firm that allowed for the derivatives inside the IRA to leverage such a strategy, as it appears to the broker in isolation that you have naked positions.
Let me know if you find a way around that, would be interesting to explore.
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thorax
Level 90 ( ͡° ͜ʖ ͡°) Warlock
Just ran across this article. It seems that if you're eligible for an HSA, you can use it as a Roth with benefits. You can fund a family HSA with up to $6500 and invest it however you wish. This effectively doubles your yearly Roth limits, while still being able to withdraw the money for medical expenses at any time (even years after the medical expense).
http://jlcollinsnh.com/2014/08/18/stocks-part-xxv-hsas-more-than-just-a-way-to-pay-your-medical-bills/
http://jlcollinsnh.com/2014/08/18/stocks-part-xxv-hsas-more-than-just-a-way-to-pay-your-medical-bills/
I'll have to issue a 4 day ban for not linking to my article on HSAs http://saverocity.com/finance/need-hsa-account/
thorax
Level 90 ( ͡° ͜ʖ ͡°) Warlock
LOL
I'll admit that I did miss that and will accept my ban. However, you didn't *really* mention that it could be used as a Roth replacement. I've no idea how to setup an HSA with Vanguard or whoever. Flesh that out for us in part 2!!!
You can only do that if self employed. Else it will be your company plan, and already established.
thorax
Level 90 ( ͡° ͜ʖ ͡°) Warlock
Ahhh okay, that makes sense. Guess I'll have to see if I can set one up...
IIRC you can once a year roll your balance from one HSA provider to another. I seem to recall FWF has active threads on which providers have good fee/investment opportunities. Perhaps that is covered in the linked articles which I didn't read (yet?). I am my first year in the HSA game and my employer plan pays sub 1% rates. I figured I'd let it build up a year or so before I looked into other providers and rollovers.
You can roll them over. I'll have to dig around myself to check up on the rules for doing so while in the plan rather than at job change time.
Note that not all 401k plans will accept the rollover- but it might.
Best bet may be to wait on the IRA to see if your new 401k accepts (and more importantly has lower cost options than an IRA!)
If not, then roll to IRA if IRA is lower cost than your old plan.
Can you clarify? Are you suggesting that there is a window which if closes means you can no longer roll out of an old 401(k)?
The only clock that comes to mind is if you do an indirect rollover and have 60 days to invest - which I wouldn't recommend doing, but maybe I'm missing something here.
Haley
I am not a robot
Yeah, I was thinking of the redeposit clock. Our 401k didn't do direct transfers and charged a pretty high fee to non-employees leaving money in. New plan didn't have great options so we had to open a new account, which took all of ten minutes, tops, except the money passed through our hands.
Do read really carefully about possible fees if you are leaving money in old employeer plans. Ours had a big fee, plus more fees for statements and limited fund choices anyhow.
Do read really carefully about possible fees if you are leaving money in old employeer plans. Ours had a big fee, plus more fees for statements and limited fund choices anyhow.