I am 51 1/2 and every year I max out my 457(b) (currently $26k). Starting next year I will have more money to invest. This will be after tax money, in the neighborhood of $40-50k. I plan to buy index-matching mutual funds with this money. Retirement is at least 3 1/2 years away but probably more like 5-11 years away.
From what I am reading it sounds like I can take $7k/yr of this additional money that I will invest and put it into a backdoor Roth. Of course I won't be able to touch this money for 5 years or until age 59 1/2, whichever comes later, without penalty, but my other income sources should be able to bridge me until then. When I am beyond the penalty phase I can take whatever money out of this Roth without taxes (noting that the portion I take out has to already be beyond 5 years).
Am I missing something or am I getting this right?
Follow-up question, once I stop working, can I keep taking $7000 out of the 457(b) (or my 401(k) if I am past 59 1/2), pay the taxes on the $7000, and put that money into the Roth, and as long as I don't touch it for 5 years, that portion will also be un-taxed on the gains?
Submitted December 08, 2020 at 09:12AM by redreddie https://ift.tt/2VUkNZ6
