Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 1
Good afternoon,

Has anyone walked through this in enough detail to offer a bit more color?

It sounds like you could pull $100k from a 401(k), move it to a Roth in something earning income, then remove income up to the Roth contribution truly tax free. Toss in the final 401(k) substantially equal distributions the tax year you turn 55 and there might be some nice early retirement potential if someone was well prepared prior to all our covid-19 losses to date.

To be more specific, imagine a situation where a hardship might credibly be called (wife laid off, cram down pay loss) but the $100k now in an IRA is not actually needed to pay bills and such. Then imagine the couple already have material past contributions to Roth IRAs. Now imagine moving capital from a 401(k) or IRA created from a rollover to a Roth in order to generate income. Do we know yet if this sequence works? Are details getting clarified now?

What is the stated time frame for folks to consider moving monies, must it be completed in 2020 for example? Is it accurate that monies need to move from a retirement account to the taxpayer and back to a retirement account within 3 years? How is that three year timer measured, please?

If there is a good primer on this, a link would be welcome. I speak finance and leagalese reasonably well.

Thank you!

John
Print the post  

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.