Annuity Equity and Roth
 

We have about the same split as you do and it is working well for us too. The issue we faced as educators is we had a 403B and a 457 which work on pretax dollars. So the interest and monies earned get taxed upon withdrawal. We have been slowly moving some of those monies into a Roth so that future earnings will grow tax free. We had an accountant do a comparison and the taxes really do take a chunk out of your earnings. We are at a 22% bracket and when we have to do RMD's we will be in the 24% bracket so we are just going to roll money over so that we don't end up in the 32% tax bracket. Also as we age it is almost certain that one of us will die before the other. To maintain our standard of living I being the wife will probably need to pay for house maintenance and all the things I don't know how to do that my husband does like clean the sprinkler heads etc. He will have to do stuff that I do that he doesn't know how. However, I would have half as much to live off of because as a widow I only will receive half of his pension. If I don't change over to a Roth then I will be taxed at the single rate not the married filing joint rate on the extra 50% that I need to make up withdrawing from his 403B. There is so much stuff to think about. I wish I knew of an honest financial planner but most I have spoken to give me advice that I don't believe is in my best interest. So far we have been doing things with the help of an accountant who I ask questions and he runs the numbers. I don't let anyone invest for me. I do it myself.

If you are retired, I would suggest that you transfer all of the money in your 403B account into a Vanguard or Fidelity traditional IRA. The fees will be lower, you will have more choices for investments, and they will assist you with many aspects of the investments. I prefer Vanguard, but Fidelity has a office at Lake Sumter where you can see a live person. 403B accounts are notorious for having excessive management fees, and some of them have even been sued because of the high fees. Vanguard or Fidelity will handle all of the paperwork to do a direct transfer.

Does the enrichment academy offer courses in Financial management? Get a financial publication or two you need to know as much about finance as you can so you can plan for the future.

Response to Friendly advice.
 

My 403 B has no fees and pays a fixed rate of 3%. I am moving some at a time into a back door Roth by paying the taxes and rolling it into a roth. I am putting it into a fixed rate MYGA which is like a CD but from an insurance company that pays 4.05%. I do have stocks and the dividends were paying me $21,000 a year in addition to my pension but with the stock downturn they are paying me about $16,000. I would not take a 403 B and move it into a traditional IRA. Because the growth would still be taxed. With the Roth the interest is not taxed.

There was a thread here a while back that discussed moving IRA money into a Roth, even though it meant an immediate tax hit in the process. Opinions varied because situations vary…….

I had done conversions to Roth from our IRAs when we had first retired and were quite a few years away from the RMD age.

My only regret is that I did not do it more often. I don’t know why I got distracted from my pay-now-so-we-don’t have-to-pay-later plan, but at least I did it a few times.

If you have several years before RMD age, if I were you, I would keep doing those conversions.

You bring up the concern of what can happen to the survivor’s income when only one is left. You are smart to be thinking ahead of that sad but inevitable event and to try to plan for it.

As we reach RMD age, we are then well into Medicare age. At that point, IRMAA can rear its ugly head and you can find yourself paying more for Medicare if AGI crosses certain thresholds. The bigger the RMD, the more likely IRMAA will get you. (If you don’t know about IRMAA yet, find out. It is another reason to do Roth conversions if you can, while you can.)

Boomer

Here is another reason to transfer as much as possible (and if possible) into a Roth to at least reduce if not eliminate RMDs. Thankfully I was able to do so one year almost 20 years ago. I still get hit with this additional 3.8% tax on some income but not as much as I would if I had to take RMDs.

Net Investment Income Tax | Internal Revenue Service