vania-janet/multiturn-rag-retrieval-data huggingface dataset:
tl;dr: Please please please do the conversion first. JoeTaxpayer's answer is correct, but I am of the opposite opinion. First, there's just about no reason to have post-tax dollars in a Traditional IRA. You'll eventually have to pay tax on the earnings those dollars generate, so it's essentially the same as having that money in a regular taxable account. Meanwhile, if you roll those dollars into a Roth IRA, you get to earn tax-free money on them for the rest of your life (and even after your death)! Second, even if you did have some reason for keeping those post-tax dollars where they are, the last thing you ever want to do is mix them with pre-tax dollars (from, say, your 401k). As soon as you mix them, all the dollars become subject to pro-rata taxation (as Joe mentioned), so any future decision you were planning to make about what to do with just your post-tax dollars is moot -- you have given away your right to think separately about your pre- and post-tax dollars. As an example, let's say the accounts you want to combine look like this: In the future you decide you want to move $2,000 from the above account into a Roth. Because you mixed the money, the IRS insists that your rollover consists of: So now you owe tax (and it's regular income tax, I believe, not even capital gains tax) on $1,500. That was money that you socked away specifically to avoid taxes, and now you've gone and paid taxes on it! Now, there are valid arguments for intentionally moving pre-tax dollars from a Traditional to a Roth like this, but the point is that you shouldn't even have to be having that argument -- you have post-tax dollars in your Traditional IRA that almost certainly belong in a Roth. By mixing your 401k into your Traditional IRA, you can no longer do anything with just the post-tax dollars. The IRS will forever insist that you do these pro-rated calculations. Say in the future you suddenly realize that a Roth is much better for your financial situation than a Traditional IRA.
(There are some exceptions (including first-time home buying and extraordinary medical expenses) to this rule that I won't bother going into). But You are not required to invest your retirement money into such a specially privileged retirement account. It is perfectly legal to keep your retirement money in an ordinary savings account if you wish, and pay taxes on the interest each year. You can invest your retirement money into municipal bonds whose interest is free of Federal tax (and usually free of state tax as well if the municipality is located in your state of residence) if you like. You can keep your retirement money in a sock under your mattress if you like, or buy a collectible item (e.g. a painting) with it (this is not permitted in an IRA), etc. In short, if you are concerned about the penalties imposed by retirement accounts on early withdrawals, forgo the benefits of these accounts and put your retirement money elsewhere where there is no penalty for instant access. If you use a money management program such as Mint or Quicken, all you need to do is name one or more accounts or a portfolio as MyRetirementMoney and voila, it is done. But those accounts/portfolios don't have to be retirement accounts in the sense of tax law; they can be anything at all.
The investments offered in 401K are usually limited to a selection of mutual funds offered by a 401K provider.  The 401K providers and the mutual funds charge fees.  The mutual fund industry has a lobbying group that will push for increased 401K contributions to direct money into their mutual funds to collect fees.  The top 401 K provider in 2005 was fidelity.  It managed $337 billion in 401Ks of which $334 billion was directed into mutual funds. Although I would have to use some of the same providers to open an IRA, I would not have to invest in the providers' mutual funds when I open an IRA.  I can buy a stock and hold onto it for 10, 20, 50 years inside of my IRA.  Thus, the only fee the investment company would collect from me would be from when I purchased the stock and when I sold the stock.  Not nearly as profitable as mutual fund fees.
"If you have enough earned income to cover this amount you should be all set. If I understand you correctly you proposed two transactions. The first, a withdrawal from the beneficiary IRA. Some of which is an RMD the rest is an extra withdrawal of funds.  Next, you propose to make a deposit to a combination of your IRA and your wife's IRA. As long as there's earned income to cover this deposit, your plan is fine.  To be clear, you can't ""take a bene IRA and deposit the RMD to an IRA."" But, money is fungible, the dollars you deposit aren't traceable, only need to be justified by enough earned income. A bene IRA is a great way to get the money to increase your own IRA or 401(k) deposits.  Further details - The 2016 contribution limit is $5,500 per person, so I did make the assumption you knew the $9000 deposit need to be split between the 2 IRAs, with no more than $5500 going into either one."
In a few days' time, the money will appear in your new Vanguard Roth IRA and the American Funds Roth IRA will have a smaller balance, possibly a zero balance, or might even be closed if you told Vanguard to collect the entire balance. DO NOT approach American Funds and tell them that you want to transfer money to a new Roth IRA with Vanguard: they will bitch and moan and drag their heels about doing so because they are unhappy to lose your business, and will probably screw up the transfer. Talk to Vanguard only. They are eager to get their hands on your IRA money and will gladly take care of the whole thing for you at no charge to you. DO NOT cash in any stock shares, or mutual fund shares, or whatever is in your Roth IRA in preparation for ""cashing out of the old account"". There is a method where you take a ""rollover distribution"" from your American Funds Roth IRA and then deposit the money into your new Vanguard Roth IRA within 60 days, but I recommend most strongly against using this because too many people manage to screw it up. It is 60 days, not two months; the clock starts from the day American Funds cuts your check, not when you get the check, and it is stopped when the money gets deposited into your new account, not the day you mailed the check to Vanguard or the day that Vanguard received it, and so on. In short, DO NOT try this at home: stick to a trustee-to-trustee transfer and avoid the hassles."
"Is option trading permitted in the account? Most 401(k) do not permit this. 1 - it means none traded today. 2 - there are 50 outstanding contracts. Each one has a guy who is long and a guy who is short.  3 - not really, it might depend on the stock.  4 - no. With commissions so low, and the inherent leverage of options, one contract reflecting 100 shares of the underlying stock, the minimum is what you can sleep soundly with.  5 - because GLD does not reflect precisely 1/10 oz of gold's price. If you look at the prospectus, it reads ""The investment objective of the Trust is for the Shares to reflect the performance of the price of gold bullion, less the Trust’s expenses."" Since there are no dividends to take expenses from, the GLD price will erode by .4% each year compared to the price of 1/10oz gold."
From your first link: IRS.gov: IRA One-Rollover-Per-Year-Rule IRA One-Rollover-Per-Year Rule Beginning in 2015, you can make only one rollover from an IRA to   another (or the same) IRA in any 12-month period, regardless of the   number of IRAs you own (Announcement  2014-15 and Announcement   2014-32). The limit will apply by aggregating all of an individual’s   IRAs, including SEP and SIMPLE IRAs as well as traditional and Roth   IRAs, effectively treating them as one IRA for purposes of the limit. They are limiting your ability to roll over money from an IRA to an IRA. You are looking to go from a 401K to an IRA. That is fine. The idea was that some people were taking all money from their IRA, using it for almost 60 days, then putting it back into an IRA. Thus getting a sort of short term loan. They could do this multiple times in a year. The direct trustee-to-trustee transfer are exempt from the once per year rule because the money is never in your possession.  Moving money from a 401K/403b/TSP plan from your former employer to an IRA or Roth IRA is fine, and isn't limited to once per year.
It is typically very easy to roll a 401(k) into an IRA.  Companies that provide IRA's are very experienced with it, and I would expect that they will take your calls from overseas. You will likely be able to do it over the internet without using a phone at all. Just open an IRA with any brokerage company (Scottrade, Vanguard, Fidelity, Schwab, Ameritrade, etc.) and follow instructions to roll your 401(k) into it.  Most likely they will need your signature, but usually a scan of a form you have filled out will do.  Be sure to have information on your 401(k) provider, including your account number there, on hand.  These companies are all very reputable and this is not a difficult transaction. There's really no downside to rolling into an IRA.  401(k) plans usually have more limited options and/or worse fee structures and are frequently harder to work with, as you have observed.
"As Mhoran answered, typical match, but some have no match at all, so not bad.  The loan provision means you can borrow up to $50k or 50% of your balance, whichever is less. 5 year payback for any loan, but a 10 year payback for a home purchase.  I am on the side of ""don't do it"" but finance is personal, and in some situations it does make sense. The elephant in this room is the expenses within the 401(k). Simply put, a high enough expense will wipe out any benefit from tax deferral. If you are in this situation, I recommend depositing to the match, but not a cent more.  Last, do they offer a Roth 401(k) option? There's a high probability you will never be in as low a tax bracket as the next few years, now's the time to focus on the Roth deposits, if not in the 401(k), then in an IRA."
If you have other savings, the diversification occurs across the accounts. e.g. my 401(k) has access to the insanely low .02% fee VIIIX (Vanguard S&P fund) You can bet it's 100% in. My IRAs are the other assets that make the full picture look better allocated.  A new investor has the issue you suggest, although right now, you can deposit $5500 for 2013, and $5500 for 2014, so with $11K available, you can start with $6 or $9K and start with 2 or 3 funds. Or $9K now, but with $500 left over for the '14 deposit, you can deposit $6K in early '15.  The disparity of $3K min/$5500 annual limit is annoying, I agree, but shouldn't be a detriment to your planning.
You can do the Roth IRA, but I think your income is too high to take a deduction on the traditional IRA.  By the way, this is the 2015 tax table -  You look like you are in the 28% bracket. A good place to be, but I'd be putting more money pre-tax in the 401(k) and consider converting in years that your rate may be lower. It's easy to get married, buy a house, and that same income puts you in the 15% bracket.  The truth is, no one can project 5 years out, let alone 40, and a mix like you have is as good an approach as any, even if I'd lean more pretax. Remember, your $4400 match is on the pretax side, so you are close to 50/50 as is.
I do this often and have never had a problem.  My broker is TD Ameritrade and they sent several emails (and even called and left a message) the week of expiry to remind me I had in the money options that would be expiring soon. Their policy is to automatically exercise all options that are at least $.01 in the money.  One email was vaguely worded, but it implied that they could liquidate other positions to raise money to exercise the options.  I would have called to clarify but I had no intention of exercising and knew I would sell them before expiry. In general though, much like with margin calls, you should avoid being in the position where the broker needs to (or can do) anything with your account. As a quick aside:  I can't think of a scenario where you wouldn't be able to sell your options, but you probably are aware of the huge spreads that exist for many illiquid options.  You'll be able to sell them, but if you're desperate, you may have to sell at the bid price, which can be significantly (25%?) lower than the ask.  I've found this to be common for options of even very liquid underlyings.  So personally, I find myself adjusting my limit price quite often near expiry.  If the quote is, say, 3.00-3.60, I'll try to sell with a limit of 3.40, and hope someone takes my offer.  If the price is not moving up and nobody is biting, move down to 3.30, 3.20, etc. In general you should definitely talk to your broker, like others have suggested.  You may be able to request that they sell the options and not attempt to exercise them at the expense of other positions you have.
As stated above, the IRA accounts themselves are individual.  But if you want to simulate a joint account, the following actions would help: Make sure to setup each account with the other spouse as the beneficiary so that each account goes to any surviving spouse should the unexpected happen. Some brokers (I know TDA does this) allow you to grant access to your account to another login, so that effectively one spouse could make the invest decisions for all your accounts.  This is better than simply sharing your username and password, which is against many T&Cs.  If you do this in both directions, each spouse has access to all accounts.
You can transfer 401(k) funds from a previous employer to an IRA, and invest it as you wish.  That $600 should go to the current 401(k) or IRA. Edit - OP has edited his question. I agree with him that each situation is unique, therefore 100% of the details are needed up front to avoid the answers that would be right for everyone else. He offered a valid reason for rejecting the current advice. There is no solution except to simply withdraw the money. It went in pretax, so taxing on way out is not a penalty. The 10% is the real penalty, and it's $60 in this case.
The earnings portion will be taxed at your marginal tax rate + 10% penalty. If the total is $100, then the earnings portion is probably not very significant for this to be a concern. But it's something you could put into a Roth IRA and let it compound with the rest of your retirement savings. Depending on your age, the compounding effect of $100 invested early enough tax free can be thousands of dollars at retirement. i.e. You have 60 days to deposit it into a Roth IRA. Don't let that pass you by.
Put in the maximum you can into the 401(k), the limit should be $16,500 so long as the highly compensated rules don't kick in. Since you cannot deduct the traditional IRA, it's a great option to deposit to a traditional IRA and immediately convert that balance to a Roth account. That puts you at $21,500/yr saved, nearly 18%.  There's nothing stopping you from investing outside these accounts. A nice ETF with low expenses, investing in a stock index (I am thinking SPY for the S&P 500) is great to accumulate long term.
"Your question was about recharacterizing. But then you said ""I contributed a few thousand dollars to my 401(k) as Roth contributions"" which means you never converted from a 401(k) to a Roth 401(k), the deposit was always Roth.  Even if the law changes allowing the recharacterization, it would not apply to your situation."
Now, there are valid arguments for intentionally moving pre-tax dollars from a Traditional to a Roth like this, but the point is that you shouldn't even have to be having that argument -- you have post-tax dollars in your Traditional IRA that almost certainly belong in a Roth. By mixing your 401k into your Traditional IRA, you can no longer do anything with just the post-tax dollars. The IRS will forever insist that you do these pro-rated calculations. Say in the future you suddenly realize that a Roth is much better for your financial situation than a Traditional IRA. (Or you might still prefer a Traditional IRA, but as explained in the next sentence it's not available to you.) Unfortunately, because you're covered by a (new) 401k -- or maybe because you earn too much money to contribute pre-tax dollars to either a Traditional or Roth IRA -- you're out of luck. You're simply not allowed to contribute to a Roth. Most people in this situation can make use of what's called a back-door Roth. They contribute up to the maximum amount per year ($5,500 or whatever it is now) post-tax to a Traditional IRA and then immediately roll it over to their Roth. You can still try this, but guess what? Yep, because you're mixing these new post-tax dollars with pre-tax money in your Traditional IRA, every year your rollover will be tainted with that pre-tax money, diluting the whole point of the back-door Roth. You'll be paying taxes on money you never wanted to pay taxes on, and you'll be leaving post-tax money behind in your traditional IRA. (If it sounds like I'm annoyed about this situation from personal experience, it's because I am. :) By doing the conversion first, you never mix pre- and post-tax money, and your money goes where you want it. Of course, assuming you eventually do roll over your 401(k) into a Traditional IRA, the Really Annoying Consequence above will still plague you, but at least you'll have cleanly converted that first post-tax amount.
One of the links showed: Specifically, for 2013, your child can contribute the lesser of: her earned income for the year or $5,500. This is correct. And while I have no issue with fool.com in general, I am a strong believer that when one cites numbers like this, the article should also state the year involved. As I quoted above.  Littleadv's answer was pretty comprehensive. All I'd add is that for a child who is likely in the zero bracket for earned income, the Roth is preferable.  Last, not to nit-pick, but the deposit does not need to be their money. My daughter earned $2300 in 2012, her $2000 Roth deposit can be from my gift to her. Or from any source. No paper trail as to the source of income is required, only that the income exist.  On re-reading I see I left out - the deposits can be spread over as many accounts as you wish, and the total is for IRA/Roth IRA total. It's silly to take small sums and create multiple accounts. Until the value is above a certain level, just find the one broker who can cover what you want to invest in.
"Yes it's entirely possible; see below.  If you can't find anything on transfers out (partial or otherwise) on anyone's site it's because they don't want to give anyone ideas. I have successfully done exactly what you're proposing earlier this year, transferring most of the value from my employer's group personal pension scheme - also Aviva! - to a much lower-cost SIPP.  The lack of any sign of movement by Aviva to post-RDR ""clean priced"" charge-levels on funds was the final straw for me.  My only regret is that I didn't do it sooner!  Transfer paperwork was initiated from the SIPP end but I was careful to make clear to HR people and Aviva's rep (or whatever group-scheme/employee benefits middleman organization he was from) that I was not exiting the company scheme and expected my employee and matching employer contributions to continue unchanged (and that I'd not be happy if some admin mess up led to me missing a month's contributions). There's a bit more on the affair in a thread here.  Aviva's rep did seem to need a bit of a prod to finally get it to happen.  With hindsight my original hope of an in-specie transfer does seem naive, but the out-of-the-market time was shorter and less scary than anticipated. Just in case you're unaware of it, Monevator's online broker list is an excellent resource to help decide who you might use for a SIPP; cheapest choice depends on level of funds and what you're likely to hold in it and how often you'll trade."
"the deadline for roth conversions is december 31st.  more precisely, roth conversions are considered to have happened in the tax year the distribution was taken. this creates a kind of loop hole for people who do an ira rollover (not a trustee-to-trustee transfer). technically, you can take money out of your traditional ira on december 31st and hold it for 60 days before deciding to roll it over into either another traditional ira or a roth ira. if you decide to put it in another traditional account, it is not a taxable event.  but if you decide to put it in a roth account, the ""conversion"" is considered to have happened in december. unfortunately non-trustee rollovers are tricky. for one, the source trustee will probably take withholding that you will have to make up with non-ira funds. and rollovers are limitted to a certain number per year. also, if you miss the 60-day deadline, you will have to pay an early-withdrawal penalty (with some exceptions). if you really want to push the envelope, you could try to do this with a 60-day-rule extension, but i wouldn't try it. source: https://www.irs.gov/publications/p590a/ch01.html oddly, recharacterizations (basically reverse roth conversions) have a deadline of october 15th of the year after the original roth conversion it is reversing. so, you could do the conversion in december, then you have up to 10 months to change your mind and ""undo"" the conversion with a ""recharacterization"". again, this is tricky business. at the very least, you should be aware that the tax calculations for recharacterization are different if you convert the funds into a new empty roth account vs an existing roth account with a previous balance. honestly, if you want to get into the recharacterization business, you can probably save more on taxes by converting in january before 20-month stock market climb rather than simply converting in the year your tax brackets are low. that is the typical recharacterization strategy. source: https://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-IRAs-Recharacterization-of-Roth-Rollovers-and-Conversions"
Technically yes, in most cases you'll probably get all the AMT you pay for exercising in-the-money incentive stock options (ISOs) credited back to you. Practically, however, inflation could significantly reduce the value of the money when you get it back. Remember you can only recover the differential between regular income tax and the tentative minimum tax (TMT) each year. Depending on your situation, that could be a few thousand dollars or less, in which case $50k of AMT credit would take a while to use up. However, as you point out, if you end up selling your shares you'll likely use up all your AMT credit that year. So yes, you'd probably get your $50k of AMT back, but a lot of people don't have that much to tie up in taxes for an extended period of time.
You do that for forty years and your retirement will be as financially secure as you can make it. If you can't max them out, the most important thing is the employer match. That's free money. Then you may prefer your Roth IRA to the 401k. Note that you can also roll over your Roth 401k to a Roth IRA. Then you can withdraw your contributions from the Roth IRA without penalty or additional tax. Alternate source. Beyond answering your question, I would still like to reiterate that Roth or traditional does not have a big effect on your investment unless you max them out or you have different tax rates now versus in retirement. It may change other things. For example, you can roll over a Roth 401k to a Roth IRA without paying taxes. And the Roth IRA will act like it was contributed directly. You have to check with your employer what their rollover rules are. They may allow it any time or only at employment separation (when you leave the job). If you do max out your Roth accounts, then they will perform better than the traditional accounts at the same nominal contribution. This is because they are tax free while your returns in the other accounts will have to pay taxes. But it doesn't matter until you hit the limits. Until then, you could just invest the tax savings of the traditional as well as the money you could invest in a Roth.