I've been thinking about my situation in the future when I have to start accessing my money (likely well before retirement age), and I'm pretty sure I've got a good grasp of things.

But I wanted to run this by the board and see if there's anything I'm not seeing here.

First off, here are my current accounts:

A. Fidelity 401k (Pretax)
B. Fidelity Roth 401k (After-tax contributions, immediately converted to Roth contributions in-plan)
C. Schwab Roth IRA
D. Schwab Brokerage

So I know that starting off, I can access from accounts C-D without much issue. Once I have no income, I can take up to $48k in long-term capital gains from my taxable brokerage at a 0% bracket. And on my Roth, contributions can come out at any time, tax-free, as long as earnings stay in until age 59.

So my plan for getting access to accounts 1-2 would be two-fold:

1. Rollover account B (Roth 401k) into account C (Roth IRA). If I'm not mistaken, I can roll over this entire balance from Fidelity to Schwab without triggering any taxes or penalties, since they're both after-tax accounts. This would effectively get around any age restrictions in a Roth 401k for early withdrawals, as well as the "prorata" withdrawals that a 401k Roth does. It also does not count against the yearly contribution limit. (Any downside to this I'm not seeing?)

2. For account A, my plan here would be to convert a small amount from my 401k to my C-Roth IRA, up to the standard deduction every year. This would be considered income, but since the entire amount would be canceled out by the standard deduction, it would allow me to maintain a $0 taxable income, allowing me to keep my long-term cap gains in that 0% tax bracket.

Does this sound doable? I wonder if there's something I'm not seeing, or a tax hit I'm not accounting for.

Thanks!

Are you planning. on retiring early? Some company retirement plans will not let you roll the plan into a regular IRA until a certain age (the NFL does this), even if you're retired. You might check you company docs.
How/Why do you plan on retiring with no income?

are you me?!

strange we have the same setup

OldArmyCT said:

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Are you planning. on retiring early? Some company retirement plans will not let you roll the plan into a regular IRA until a certain age (the NFL does this), even if you're retired. You might check you company docs.
How/Why do you plan on retiring with no income?

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Yes. And as far as the retirement plan, there's no such restriction that I know of. I'm actually no longer employed with that employer (we were outsourced to Accenture), so I'm pretty sure I could do that immediately if I so chose. We were told rolling over to an IRA was one of our options, but I left it alone.

As for the second question, it's a big question, probably for another thread. But if you're familiar with the FI/RE movement, that's something I learned about pretty early on in my career and have had early retirement as a goal of mine ever since. If you look up the 4% rule, that is my bare minimum threshold before I'll even consider retiring.

LMCane said:

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are you me?!

strange we have the same setup

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I your balance in your pretax 401(k) is large you might want to look at converting more than the standard deduction amount. Paying 10-12% now is much better than paying 22-28% in the future.

Good point.

you can look into doing a roth conversion ladder once you retire. your taxable income will drop by a lot when you retire early and you can covert chunks of money from your traditional ira (rolled over from your 401k potentially) into your roth and have access to that conversion after 5 years.
So you can convert 100k a year for 5 years and starting at year 6 you can pull the contributions you made in year 1 out to live on.

You can also roll out part of your 401k into an IRA and annuitize it to get access to that money sooner, but I wouldn't only consider that as a last resort since you would be giving up a lot of potential gains.

I have a question

Doesn't your Fidelity Roth 401k move into your Schwab IRA



I just started a Roth IRA because there's a 5 year rule on accessing the Roth 401K if you have not had a Roth for 5 years

It would likely depend on if the plan allows in service distributions. Fidelity 401k offers companies the ability to allow Roth in plan conversations for after tax contributions (aka the mega back door Roth IRA). I think most plans allow in service distributions after age 59.5 so you could roll it to your Schwab roth IRA but most likely if you are under 59.5 you would have to wait till you are no longer employed before you could roll it into your Schwab account