Frozen Sooner
2/4/2006, 12:02 PM
OK, since I'm switching jobs AND I'm moving into a position that will be comissioned after six months, I have some decisions to make.
First, I want to make sure that I have roughly $8k in my savings account in case I have a bad month and I need to get at money to live.
Second, I have a pretty decent-size 401(k).
What I'd like to do is roll the 401(k) money into a traditional IRA, then into a Roth conversion IRA. Of course, at this point, I pay the marginal tax rate on all the money that I just rolled in to the Roth, but avoid the 10% withdrawal penalty on the 401(k), yes?
Now, since principal withdrawals on Roths are penalty-free, I can then pull $8k out to buffer my savings without penalty, yes?
And I know you should never touch your retirement money. However, based on market projections I should have PLENTY of money to retire on if I don't contribute a single thing more to that IRA over the next 30 years.
First, I want to make sure that I have roughly $8k in my savings account in case I have a bad month and I need to get at money to live.
Second, I have a pretty decent-size 401(k).
What I'd like to do is roll the 401(k) money into a traditional IRA, then into a Roth conversion IRA. Of course, at this point, I pay the marginal tax rate on all the money that I just rolled in to the Roth, but avoid the 10% withdrawal penalty on the 401(k), yes?
Now, since principal withdrawals on Roths are penalty-free, I can then pull $8k out to buffer my savings without penalty, yes?
And I know you should never touch your retirement money. However, based on market projections I should have PLENTY of money to retire on if I don't contribute a single thing more to that IRA over the next 30 years.