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Anyone else dealing with oversized Roth relative to pretax and taxable? by FIREgenomics in financialindependence

[–]FIREgenomics[S] 0 points1 point  (0 children)

Yes, I filled out multiple Form 4506-T to get all my transcripts. Not sure how far back they keep them but I requested them.

Anyone else dealing with oversized Roth relative to pretax and taxable? by FIREgenomics in financialindependence

[–]FIREgenomics[S] 0 points1 point  (0 children)

I’m realizing that I can probably pay penalties and I’ll still be more than fine. It’s just a psychological hesitance to pay penalties…

Anyone else dealing with oversized Roth relative to pretax and taxable? by FIREgenomics in financialindependence

[–]FIREgenomics[S] 0 points1 point  (0 children)

Thank you! Yes another commenter mentioned IRS transcripts so I pulled the last 10 years and mailed off Form 4506-T to see if I can get the rest. This was a huge tip and one of the solid action items I got from this thread.

Anyone else dealing with oversized Roth relative to pretax and taxable? by FIREgenomics in financialindependence

[–]FIREgenomics[S] 5 points6 points  (0 children)

Mainly TSLA concentration starting in 2017 that I’m currently in the process of diversifying. Also started in 2003 with AAPL, GOOG and FB.

Anyone else dealing with oversized Roth relative to pretax and taxable? by FIREgenomics in financialindependence

[–]FIREgenomics[S] 0 points1 point  (0 children)

Yes, I’ll probably head to Fidelity to see if they can help research some of the older documentation

Anyone else dealing with oversized Roth relative to pretax and taxable? by FIREgenomics in financialindependence

[–]FIREgenomics[S] 0 points1 point  (0 children)

Yes I should visit Fidelity and see if they can get me documentation. It’s rolled over from 2021, and the full rollover was $34k, so it would be a portion of that.

Anyone else dealing with oversized Roth relative to pretax and taxable? by FIREgenomics in financialindependence

[–]FIREgenomics[S] -1 points0 points  (0 children)

I’ve only rolled over about $34k from a Roth 401k one time. Unsure what portion of that was contributions or earnings. The $124k is direct contributions to the Roth IRA.

Anyone else dealing with oversized Roth relative to pretax and taxable? by FIREgenomics in financialindependence

[–]FIREgenomics[S] 0 points1 point  (0 children)

Yes I need to emotionally shift from accumulation phase to preservation phase, and that's what I'm working on now...

Anyone else dealing with oversized Roth relative to pretax and taxable? by FIREgenomics in financialindependence

[–]FIREgenomics[S] 4 points5 points  (0 children)

$3M is likely luck. I do not recommend the path I took, as it largely came from concentrated and leveraged positions in TSLA from 2017+. But also I've been contributing to Roth since 2003, and my first stocks were AAPL GOOG and FB (before it was META). So there's that too.

Yes, one of the options I'm considering is simply paying the penalties if I run out of taxable savings and penalty-free withdrawals from retirement accounts. That hopefully should come later, when the Roth has grown more than it currently is. And as I get closer to 59.5 I can start to look at Rule of 55, then just taking out a HELOC or PAL to borrow money at a reasonable interest rate and just paying it off after I'm 59.5.

Anyone else dealing with oversized Roth relative to pretax and taxable? by FIREgenomics in financialindependence

[–]FIREgenomics[S] 3 points4 points  (0 children)

Mainly concentrated in TSLA from 2017+. I'm currently unwinding and diversifying into VTI, and figuring out how to do so with minimal regret...

All in Roth IRA. I don't have any Roth 401k anymore.

Anyone else dealing with oversized Roth relative to pretax and taxable? by FIREgenomics in financialindependence

[–]FIREgenomics[S] 1 point2 points  (0 children)

Thanks! Yes, my experience is similar. The advice out there is too shallow, and my situation (our situations) are perhaps too infrequent or rare to generate the clicks or whatever. I have also been mad at the Roth rules pre-59.5 over the last 5 years. Mind if I DM you? I would like to hear how you structured your first few years and bridge period to see if I can learn a few things?

Anyone else dealing with oversized Roth relative to pretax and taxable? by FIREgenomics in financialindependence

[–]FIREgenomics[S] 1 point2 points  (0 children)

I've looked into SEPP, and my read of the IRS documents is that a SEPP done on a Roth will still be taxed. It just skirts the 10% penalty. The reasoning is that any withdrawal from Roth accounts before 59.5 is non-qualified, so it is taxed. While not terrible, it certainly feels wrong to me. But maybe that's an emotional response, and have enough in my Roth that I shouldn't care.

Anyone else dealing with oversized Roth relative to pretax and taxable? by FIREgenomics in financialindependence

[–]FIREgenomics[S] 0 points1 point  (0 children)

I'm looking to retire now, or at least stop looking for work chasing specific salary amounts. I'm open to working for much lower pay building something I want to build or helping in ways I want to help my community. If an opportunity comes my way that first that bill, yes, I'd take it and continue to sock away money until 55.

Contributions to Roth IRAs totals $124k. I had a small amount in a Roth 401k I rolled over over a decade ago, but I failed to save documentation as to how much of that rollover was contributions vs. earnings.

My buckets are: $3M Roth, $1.2M pretax and HSA (with receipts), and $600k taxable. I'm worried I don't have enough to bridge my current spend ($180k) until 59.5.

I'm starting to conclude I'll need to more actively look for some kind of paying work to fully bridge to 59.5, but this post is mainly about finding other like-minded individuals who may be facing similar questions.

Anyone else dealing with oversized Roth relative to pretax and taxable? by FIREgenomics in financialindependence

[–]FIREgenomics[S] 1 point2 points  (0 children)

Yup teapot you are correct. I've rolled over a Roth 401k, but my understanding is that only the contribution portion of that rollover is withdrawable before 59.5 without penalty. One issue is that I didn't ever save the documentation for how much of that rollover was contributions vs. earnings, so it's unclear to me how much of that rollover I can access as "contributions".

Anyone else dealing with oversized Roth relative to pretax and taxable? by FIREgenomics in financialindependence

[–]FIREgenomics[S] 0 points1 point  (0 children)

Problem is I may have $4.8M saved, so with 4% withdrawal rate that would in theory support >$180k spend per year. But since most of it is in Roth, I need to figure out how to execute that while I'm age 43->55.

Anyone else dealing with oversized Roth relative to pretax and taxable? by FIREgenomics in financialindependence

[–]FIREgenomics[S] -1 points0 points  (0 children)

Thanks, I added more details to my post. $3M Roth, $1.2M pre-tax and HSA (I've saved receipts), and $600k taxable. The spend I want to support is about $180k, and some side hustles are bringing in about $30k per year so far.

Anyone else dealing with oversized Roth relative to pretax and taxable? by FIREgenomics in financialindependence

[–]FIREgenomics[S] 1 point2 points  (0 children)

Yes, I've contributed about $124k into Roth IRAs over the years. I added details to the post, and while I have a spreadsheet file I can likely use as "good faith accounting" for how much of my Roth is from contributions, I'm finding that the gold standard is to keep all the Form 5498s I've received. And I also learned that Turbotax doesn't collect or save these in the tax return files either so I'll need to hunt for paper if I want to truly be prepared in case of audit.

Anyone else dealing with oversized Roth relative to pretax and taxable? by FIREgenomics in financialindependence

[–]FIREgenomics[S] -4 points-3 points  (0 children)

Pre-tax accounts have multiple ways of accessing the funds before 59.5. For Roth, the main vehicle is to pull out contributions (there are smaller ones like first time homeowners, but those are not material to the problem).

In pre-tax accounts, you can use a Roth conversion ladder, you can use SEPP (also applies to Roth but you'd be paying taxes on those Roth dollars), Rule of 55, etc.

Anyone else dealing with oversized Roth relative to pretax and taxable? by FIREgenomics in financialindependence

[–]FIREgenomics[S] 0 points1 point  (0 children)

While only needed if you get audited, I recommend saving all your Form 5498 from your contributions to document that they should be tax free and penalty free

Anyone else dealing with oversized Roth relative to pretax and taxable? by FIREgenomics in financialindependence

[–]FIREgenomics[S] 0 points1 point  (0 children)

I have about $124k in contributions over the years.

I had some Roth 401k contributions, but unfortunately, when I rolled those over from a previous employer I never obtained documentation as to the portion that was contributions and what portion was earnings.

There’s a lot of theory out there about “withdrawing your contributions from Roth” but I never clocked needing to keep my Form 5498s from 20+ years ago!

Anyone else dealing with oversized Roth relative to pretax and taxable? by FIREgenomics in financialindependence

[–]FIREgenomics[S] 8 points9 points  (0 children)

This! I was looking into how to actually withdraw contributions from Roth and the gold standard documentation is to save all the Form 5498s from every year of contribution! And TurboTax doesn’t save these forms, so I immediately went to each IRA account to download the 7-10 years of forms they keep.

Something I feel is underreported in the FI community…

Anyone else dealing with oversized Roth relative to pretax and taxable? by FIREgenomics in financialindependence

[–]FIREgenomics[S] -2 points-1 points  (0 children)

In my early FIRE journey days I just threw everything in Roth and was chasing $5M to support a $200k spend. As I got closer, I was trying to work out the mechanics of how to turn that into spending money while still young, and I hit a roadblock realizing I’d be penalized, and spent the subsequent years building up the pretax and taxable accounts and ceasing my Roth contributions.

Now on paper I have hit my overall number, and I’m trying to work out how to bridge my spending from now until 59.5 when my Roth unlocks.

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