This coming year will mark the fifth time in as many years that I, along with a strategically assembled group of specialists, make the arduous fishing expedition to the Northwoods.

There, in nature, we find a bit of a respite from the everyday rigors of urban living. No one from our group is likely to join the Bass Pro Tour, but each can identify spoiled macaroni salad and dubious prime-rib buffets at the local lodge (as critical to survival as edible flora and a small game snare trap).

Truth be told, we are typically well fed and adequately stocked — bringing enough supplies on our three-day trip to withstand a month-long siege. And normally the weekend will yield a basket of fish stout enough to feed a party of six hungry “backwoodsmen” on the final night. However, it is not always that easy.

On one occasion our live wells were sparsely populated with only a day left. The last evening we found a lazy school of crappies, and were reeling them in left and right. Unfortunately our two boats were marooned — perhaps anchored — about 30 yards apart in a back bay of the Chippewa Flowage, and we had no way of retrieving our brandy old-fashioneds.

That is, until as local lore has it — a fishing line was cast over to our counterpart, and as the sun started to descend into the pines, the three cocktails were stealthily reeled over in a hollowed out tackle-box — tethered to a buoyant life vest, as the loons cried out in approval.

When out in the wilderness and confronted with these types of decisions, one must be able to adapt in order to put food on the table or “net” an evening mixer. The same can be said of the confounding intricacies of the tax code and how it relates to retirement planning. There is such a breadth of information and advice on these topics, but let’s just focus on a few aspects of the Roth IRA and Roth 401(k).

Most everyone is familiar with the benefits of the Roth IRA and Roth 401k. These instruments allow for growth and compounding to be withdrawn tax-free, provided it is a qualified distribution. A qualified distribution from these vehicles is one made upon reaching the five-year rule and age of 59½, death or as the result of disability or a first-time home purchase. These qualified distributions are free of both taxes and penalties. Early (unqualified) withdrawals would be subject to taxes and penalties — the amount of tax is prorated by determining the ratio of earnings to contributions.

Did you know?

• Roth IRA contributions can be withdrawn at any time tax-free and penalty-free regardless of age.

• Roth 401(k) money left with an employer’s plan is subject to required minimum distributions at 70½, but waived if working for that employer.

There are income and contribution limits that could restrict one’s Roth IRA contributions or negate them altogether, but under a Roth 401(k) there are no restrictions based on income and the contribution limits are much higher. For those with income restricting Roth IRA contributions, you might consider using a “backdoor” Roth IRA, by way of conversion:

• Convert money held in a taxable retirement account (IRA) to a Roth IRA, albeit subject to potential income taxes.

• Each separate conversion from a pre-tax account to a Roth IRA is subject to a new five-year period, unless one has met the criteria for qualified distribution.

Here is a little bit more insight on five-year rule issues:

• A Roth 401k and Roth IRA can generally be rolled or transferred to an identical-type account without starting the five years over, or maintaining the established credit for time in the plan.

• If a Roth IRA has been established outside of your employer’s plan for at least five years, one could roll the Roth 401(k) over to the Roth IRA making these funds available under qualified distributions.

• Basically any Roth IRA not yet in existence for five years would be subject to the qualifying period of five years — even if you are of retirement age.

We are really bobbing along the surface with some of this information. Contrary to popular belief, fishing is not always better on the other side of the lake. So, whether starting your career or closing in on the last few years until retirement, it is important to drop an anchor and explore some of these ideas — work to develop a strategy in line with your needs.

Securities and insurance products offered Through LPL Financial and its affiliates. Member FINRA/SIPC. LPL Financial and Dupaco Community Credit Union and its subsidiary, Dupaco Financial Services Inc., are not affiliated.

Mutual funds, annuities, and other investments: are not deposits; are not insured by the NCUA or any other regulatory agency; are not obligations of, or guaranteed by Dupaco Community Credit Union or any other affiliated entity; are subject to investment risks, including possible loss of principal amount invested.

Michael Poppen is a financial consultant with Dupaco Financial Services in Dubuque.

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