BEST OF CALLER QUESTIONS ~ FRIDAY July 3rd

**Justin Klein** (0:01)
This is a special Invest Talk, Best of Caller Questions compilation program. Remember, the Invest Talk phone lines never close. Please call with questions. 888-99-CHART, 888-99-CHART.
They will be played and answered on an upcoming Invest Talk podcast.

**Justin Klein** (0:22)
Let's go talk to Orlando in San Bernardino. Let's talk about an IRA.

**SPEAKER_3** (0:26)
Hi, so I have an account from my old job that I never rolled over. I do make over 100,000 a year and I recently got married. My wife makes around 30, so I think it would be a good year to actually put it into my Roth IRA that I have with Vanguard, right?

**Justin Klein** (0:45)
Well, that's a broader tax question and what tax bracket you're in. Putting money into a Roth IRA or 401k doesn't matter. It matters less about what your tax rate is today and more about what it is compared to the future. If in the future you're going to have, be in a lower tax bracket, then you want to wait, keep it in an IRA or traditional 401k and then you roll it into that Roth IRA later, do a Roth conversion. So what I would say is, roll it into an IRA, simple as that. And remember, you don't have to do it all. You can say, okay, I'm going to roll it into an IRA and then I'm going to convert $3,000 into a Roth and then $3,000 will hit your adjusted gross income that year.
So it's not an all or nothing proposition. Yeah, it's not, I do it all in one or do all in another. You do it all into an IRA and then you can piecemeal it over time into a Roth IRA. Do you know how much is in that old 401k?

**SPEAKER_3** (1:48)
A few thousand, it's not a whole lot.

**Justin Klein** (1:49)
Okay, so I would roll it into an IRA. I would talk to, do you have a CPA or a tax advisor?

**SPEAKER_3** (1:57)
No, not yet.

**Justin Klein** (1:58)
Okay, so I would have a plan for it. I wouldn't just do it just to do it.
I would talk to probably a tax advisor, if you have a financial advisor building a plan for you, it's what we do for clients to kind of figure out when that should go into the Roth. Typically the best time to do it is between retirement and taking social security. That's the time where most people, they've amassed a nest egg and then they retire, they no longer work and they don't have much income, if at all and they're a very, very low tax bracket and then they can start converting their tax deferred accounts like 401ks and IRAs to a Roth IRA slowly, right? A little bit over time just to fill you up to that next tax bracket and then do more the following year. So remember, Roth conversions are not all or nothing. You can do it slowly over time and that's usually the best strategy based on years that you're in a low tax bracket.

**SPEAKER_3** (2:55)
Oh, great advice. Thank you, Justin.

**Justin Klein** (2:57)
No problem.

**Luke Guerrero** (2:58)
All right, let's go to Roger. He's calling in from the Bay Area, who has a question about 401ks. How can I help you, Roger?

**Roger** (3:03)
Hi, Luke. Thanks for taking my call. My question is regarding the Trump signing an executive order today to make it easier for the 401k plans to offer private equity investing. What's your take on that? On the same lines, I was, in fact, thinking for long and looking to add a hoarding in the private equity space and was looking at either Blackstone or Apollo Global Management. Any take on either of these two and what would be a better choice?
And what price should I get in? Because I feel currently they are overvalued.

**Luke Guerrero** (3:40)
Yeah, well, I'll talk about the first question, not to spend too much time on all of these, but I think the more important part of your question was about the executive order for 401ks, which is supposed to give more exposure to alternative assets, make it so you can get more exposure to alternative assets within 401k plans. The reason why that wasn't the case before is, well, there's a lot of interesting liability between the employer and the employee when the employer offers certain funds. Employers can be sued for not offering funds that are, let's say, suitable for retirement purposes. And so because of that, there was a narrow definition of what could be within 401k plans. So this order enables retirement plans to include alternative assets such as private equity, real estate, cryptocurrencies, commodity, infrastructure funds, and digital strategies alongside those traditional stock and bond funds.