Anyone else dealing with oversized Roth relative to pretax and taxable?
I’ve read all the FI materials and most of it focuses on a huge pretax bucket, and I understand why. But I’m in (what feels like) a unique situation where my Roth is large but my pretax and taxable are relatively small.
I was blindly maxing my Roth from 2003-2021, which is when I realized I need non-Roth monies to RE without tax penalties.
Anyways, I’m working through how to bridge from now until 59.5 (I’m 43), and would love to discuss with others who may be in a similar situation.
I’ve bounced a few ideas around with chatGPT but would really appreciate some human input, but maybe that means I should really seek a fee-only fiduciary.
I think for those with a large Roth, and smaller taxable and pretax monies, some more obscure ideas I’ve been looking at are things like utilizing Rule of 55 to access pretax funds out of a solo 401k (or just finding a job for its 401k to utilize Rule of 55), and also using a HELOC or PAL to simply borrow money as 59.5 gets closer, knowing Roth funds can easily pay it off once 59.5 hits.
Edit: Adding some more details, I didn't think there'd be this much action on this post. $3M in Roth, $1.2M in pre-tax plus HSA, $600k in taxable brokerage and cash. I have about $124k in Roth contributions, plus some unknown amount of contributions to a Roth 401k I had rolled over (but didn't document!). The spend I want to support is $180k per year.
Another learning as I'm looking at pulling those Roth contribution dollars: while this only applies if I get audited, the gold standard for "proving" the money I take from my Roth is from my contributions is to keep all the Form 5498s I've received each year I contributed. I did not know that. I may have those somewhere but my brokerages and banks only keep 7-10 years of these forms for download, and like I mentioned, I've been contributing since 2003. My first account was with TD Ameritrade which is now Schwab, but I can imagine for others there may be contributions to accounts with firms that no longer exist. So keep those Form 5498s if you ever want to use your Roth contributions before 59.5 and want to be prepared in case of audit.