A Redditor in the Chubby FIRE subreddit plans to quit their job and return to school, simultaneously switching approximately $90,000 from both a traditional 401(k) and a Roth 401(k) into a Roth IRA. This shift allows for tax-free withdrawals in retirement and offers greater investment flexibility. While rolling over funds appears straightforward, it is recommended to consult with a financial advisor to ensure that the chosen strategy aligns with one's long-term financial goals, especially given the differing tax treatments of traditional and Roth accounts.
The Redditor's plan to roll over their traditional 401(k) and Roth 401(k) into a single Roth IRA represents a strategic advantages for managing retirement savings.
Traditional IRAs appeal primarily for higher income earners seeking tax deferral, while Roth IRAs are more beneficial when your income is lower.
Contributions to a Roth IRA are taxed upfront, but provide tax-free withdrawals in retirement, distinguishing it from traditional IRA alternatives.
It's wise to consult with a financial advisor to ensure your retirement funds are optimally positioned, especially when changing job status.
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