Retirement savings

amother

Wed, Jul 07 2021, 4:43 pm

I have a 401(k). I contribute to it, and part of that is matched by my employer. I can choose to do a Roth conversion or rollover. I have so many questions...
I know that having money in a Roth will be good at this point in my life, so that's not what I'm asking. I just don't know enough about how this works and the place that has the 401k and roth don't give enough details for me. Can anyone help, advise, or give suggestions?
1. Is a conversion and rollover the same thing?
2. Can I move money that my employer contributed to the 401k into the roth?
3. what are the limits on yearly contributions to 401k, roth, or both combined? are these individual limits or for both spouses? (You can't contribute more than your income-is that right?)
4. Should I put as much as possible in the Roth, (meaning as much as I can afford taxes on) or divide between Roth and 401k?
5. does it matter if I'm dealing with my future contributions vs past contributions+earnings?
6. What else should I know???

Amarante

Wed, Jul 07 2021, 5:03 pm

Very general advice

Most people contribute up the the maximum matched by their employer because to not take advantage of this is like throwing away money

Generally conversions and roll overs are applicable when you leave a job because you can't leave the funds with your previous employer and if you put them into a new IRA type account you won't be taxed as a withdrawal.

Amarante

Wed, Jul 07 2021, 10:09 pm

It really is impossible to make specific recommendations without knowing more. You would probably be well served by setting up an appointment with a fee based financial planner who is certified. It is important that they are fee based so they don't steer you towards investments that they make a commission on.

You don't need someone to manage your finances so you would probably only need a relatively short visit and then could follow up annually to make sure you are on track.

Briefly the 401 (k) and the Roth are separate retirement savings vehicles. People generally save at least up to the max that is matched by their employees. I believe there are also vesting requirements so that you don't get the full matching until you have worked X number of years but that would depend on your employer's benefit package.

You would then be able to save money in either a traditional IRA or Roth - depends on what your taxable income is as you are taxed on money put into a Roth but money put into an IRA is tax deferred but taxed when you withdraw when you retire. These are very general guideline - really you would be well served by getting a very basic book on retirement savings and perhaps subscribing to one of the consumer oriented financial guides like MONEY although there is lots of information on the web as well if you know you are going to a reliable source. For example, Fidelity and Vanguard generally have information on their websites and they are reliable.

One advantage of a Roth/IRA is that you are not limited to the investment choices offered by your employer.

But again - I would suggest that you make an appointment with a well recommended financial planner who works for a fee for at least one visit as they would be able to answer your general questions as well as those relating to your specific economic needs.