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Finished up my severance agreement with my employer, now I am figuring out what to do with my 401k.  I'm interested in doing a backdoor Roth, but my contribution sources include both pre-taxed and taxed (I did pre-tax for a couple years before doing Roth 401k contributions for the past 3 years) and I am anticipating wild income swings over the next two years.  I'm looking for guidance considering my income this year was very high due to the severance package, and I don't have a solid understanding of the tax liabilities.  Next year's income will drop down to more typical levels, but is expected to rise again in 2018 when my wife enters the workforce. Here's my situation:

Age: 33, Married.
2015 Income: 200k
2016 Income: 350k due to severance
2017 Projected income with new job: 170k
2018 Projected income when wife re-enters workforce: 300k

Ex-employer 401k (Fidelity): 100k, consisting of:
     27% Roth 401k
     15% Employer match
     10% Employee Deferral
     48% Traditional 401k

Current Roth IRA: 5,500

For what it's worth, I have two 529 college accounts for the kids (one of which I'm still contributing to - I have about $10k left). I also have a Vanguard $200k brokerage account which I plan on liquidating for real estate assets when the market turns more favorable.  With my new employer, they have set me up with a Vanguard "employee plan" (401k?) which I am contributing to.

What would be the most effective route to maximize my retirement on the $100k?

Thank you

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Why would you want to do Roth with such high income?

I wish I had your problem That is some nice Income at 33.

gnopgnip said:   Why would you want to do Roth with such high income?
  
... Isn't that kind of his only option as far as a tax advantage account? I mean, maybe hold off on the ROTH in 2016 since OP has an unusually high income of 350k tossing him into the 33% bracket when he is normally around the 25%.

Outside of that, I don't see much else that OP can do that he doesn't already do (529, 401k, etc..). The only thing not mentioned is healthcare related - Maybe HSA Contributions?

justignoredem said:   
gnopgnip said:   Why would you want to do Roth with such high income?
  
... Isn't that kind of his only option as far as a tax advantage account? I mean, maybe hold off on the ROTH in 2016 since OP has an unusually high income of 350k tossing him into the 33% bracket when he is normally around the 25%.

Outside of that, I don't see much else that OP can do that he doesn't already do (529, 401k, etc..). The only thing not mentioned is healthcare related - Maybe HSA Contributions?

  That's what I am wondering as well.  What alternatives are there to the Roth?  Also, would it be worth splitting the 401k to separate accounts based on what has been taxed?

On a side note, anybody recommend a financial planner in the SF bay area?  I've been through a few and don't like their retirement philosophies (eg. put everything in municipal bonds, try out special managed fund, etc etc.)

There's really no point in not putting $5500 in a Roth IRA this year. The only reason not to do it would be to put it in a traditional IRA and deduct it, but you're well above the income level phase out range for deducting a traditional IRA contribution since your employer offers a separate retirement plan.

You'll probably have to do a backdoor Roth contribution by first making a non-deductible contribution to a traditional IRA (use form 8606) and then converting it to Roth. This could be complicated if you already have a traditional IRA, but you didn't mention that, so I don't anticipate it should be a problem.

I am not a CPA. Double check everything I said with a professional.



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