Wrapping up 2017 – Roth IRA Conversion and Book List

2017 is almost done.  Did you have a great year?

I look forward to 2018.  The New Year always brings me hope and excitement.  Part of the reason is that, I love spring.  It’s the season when it gets warmer, flowers start blooming, and trees and grass become green.

I have retired for 2.5+ years.  Life has been very good.  One day I was at a doctor’s office.  The nurse was a very nice lady.  She asked me where I was working at.  I smiled broadly, and told her I was retired.  She replied jokingly: “Look at that smile.  I hate you.”

Two things I’d like to share with you today:  Roth IRA conversion, and the books I enjoyed this year.

Roth IRA Conversion

Two weeks ago, I did the Roth IRA Conversion from my Rollover IRA account.  IRA means Individual Retirement Account.  After retirement, I pulled money from the 401K of my previous employer, and put it to a Rollover IRA account.  In this way, my retirement accounts were consolidated.  It’s easier to manage them, plus the fees are lower after the rollover.

The money in the rollover IRA was contributed pre-tax.  Therefore, I’ll have to pay the income tax for the amount converted.  This will be done when I file the tax return for 2017.

Currently the IRA rules allow Roth IRA conversion without any income cap.  Anyone can do it, and you can convert any amount, as long as you pay the income tax on the converted amount.  There is no 10% early-withdrawal penalty if you get the conversion done within the 60-day window.

The key is to make sure, it makes sense tax wise.  In my case, I feel the current tax rate is not bad.  The conversion will lower my RMD amount when I hit the age 70 and half.  RMD means Required Minimum Distribution.  With the new tax bill in place, I’ll definitely do another conversion in December 2018.

The conversion process is really not that hard.  I created the Roth IRA account online, and then called the support line.  They even didn’t have to sell my mutual funds in the Rollover IRA, and just did the position transfer directly.  I made it clear – no Federal or State tax withholding.  I’ll pay the tax myself and separately.  So it’s 100-to-100 conversion.

Any tax withholding could complicate the process, as you have to put the new money into Roth IRA, to make up the withholding amount.  In another word, the conversion must be 100-to-100.  Otherwise you’ll have to pay the 10% penalty for the tax withholding amount.  The reason is that, if there is tax withholding, the conversion becomes 100 to (100 minus the tax withholding).

That’s enough fun for the Roth IRA conversion.

The Books I Enjoyed This Year

One of the great things of retirement is that, I have more time to read.  I like reading.  It made me to think, and appreciate life more.  Here lists a few books I enjoyed the most in 2017:

  • When Breath Becomes Air”, by Paul Kalanithi

I got to know this book from Bill Gates.  I subscribed to Mr. Gates’ blog.  Once a while, he sent out an email about his list of favorite reads.  I usually check each of the books, and see it’s interesting to me.

This book by Dr. Paul Kalanithi is one of the best books I ever read.  He was a Stanford neurosurgeon, a writer, a graduate from Stanford, Cambridge, and Yale. Unfortunately he passed away at the age of 37.  Such a beautiful life was cut short by cancer.

I read this book many times, and cried a lot.  The book reminds me that, life is so short and transient.  Enjoy it before it’s too late.  Rest in peace, Dr. Kalanithi.

  • “Hillbilly Elegy: A Memoir of a Family and Culture in Crisis”, by J. D. Vance

Thanks to Bill Gates, I got the chance to know this book.  The story is about Middletown, Ohio.  As a Central Ohioan, I’m shocked by the story of this book.  Is the drug epidemic really happening in Ohio?  The answer is yes.

Middletown is 100 miles from where I live.  It’s really not that far.  Three and half years ago, one of my college buddies stopped at Middletown, Ohio, and I met her and her family there.  We stayed there overnight, did a lot of catch up, and had a great time.  The town seemed like a regular small town in Ohio to me.

Actually it’s not regular.  Drug has become a huge problem, and affects many families like J. D. Vance’s.  It’s heartbreaking to see families torn apart, and kids being ignored. It is a tragedy.

On the other hand, I saw some hope.  Mr. Vance grew up there and experienced tons of adversities.  He completed his bachelor degree in less than 3 years at Ohio State University, while working on multiple jobs.  And he got his law degree from Yale.  What an achievement!

  • “My Father Before Me: A Memoir”, by Chris Forhan

I found this book in my local library.  It sits there in the new book non-fiction section.  The book cover caught my eyes:  a young boy (probably 3 or 4 years old) standing there and waiting.  Whom is he waiting for?  Is he waiting for his dad?

Mr. Forhan has 7 siblings.  His mom was a homemaker, and became a teacher later.  His dad was an accountant, and worked very hard to provide for the family of ten.  To the outsiders, the family seemed like a normal one.  It was not.

Many times, Mr. Forhan’s dad didn’t show up at the dinner table.  Kids didn’t know where their dad was, and didn’t ask what dad was up to.  On a night before the Christmas in 1973, his dad killed himself, in the carport at home.

I did a lot of soul searching while reading this book.  Have I communicated enough with my parents?  Do I know what they are thinking about?  As a parent myself, I also wonder if I communicated with my kid effectively.

  • “Born a Crime: Stories from a South African Childhood”, by Trevor Noah

Bill Gates mentioned about this book in his blog.  This is the first time I got to know the horrific details about the apartheid in South Africa.  It’s a huge shame in human history that apartheid happened and lasted that long.

Mr. Noah may not be a stranger to anyone who watches his daily comedy show.  He grew up in South Africa.  He is not only the witness of the apartheid tragedy, but also the victim, simply because of the color of his skin.  He was born to a Swiss white dad and a black mom.

I like this book overall.  But some of the jokes are kind of raw to me.

  • “Reclaiming Conversation: The Power of Talk in a Digital Age”, by Sherry Turkle

Is the face to face conversation outdated, considering the messages flooded on Facebook, Twitter, and other social media?  MIT’s Sherry Turkle did a lot of research on how this digital age affects our daily life and communication.  When was the last time you called your friend using the real phone?  Do you miss your friends’ face expression, body language, and the voice?  I do.

————–  End of my book list  —————-

Overall, I had a lot of fun reading this year.  In 2018, two books are on my to-read list for now:

  • “The Top Five Regrets of the Dying: A Life Transformed by the Dearly Departing”, by Bronnie Ware
  • “Chasing daylight : how my forthcoming death transformed my life : a final account” by Eugene O’Kelly

It seems I’m obsessed with life and death.  I might also check Richard Thaler’s books about behavioral economics.

What books did you like this year?  Any new books you plan to read for 2018?  Have you checked my ebook “Dad’s Bicycle – Journey of A Chinese Family”?

Happy New Year to you all!

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2 Responses

  1. EHC says:

    Can you explain the “60 days window” in your post about Roth IRA conversion?
    Nice book recommendations… Will need to look into some of them.
    Have a safe and happy new year!

    • Retire Early Helen says:

      The 60-day window starts on the day when the money is pulled out of the traditional IRA. The IRA owner has up to 60 days to put the money 100% into the Roth IRA account. If the traditional IRA and Roth IRA are with two different companies, the transfer might take some time if a paper check is involved. Make sure the transfer is completed within 60 days to avoid any tax complications. In my case, both accounts are with the same company, and the transfer was done on the phone in a couple of minutes.
      Happy 2018!

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