- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
re: Tax Diversification in Retirement Holdings
Posted on 1/14/19 at 1:27 pm to brian_wilson
Posted on 1/14/19 at 1:27 pm to brian_wilson
quote:
The thing is the fed gov't can change this at any time and most people don't have Roths.
But I can't see how it is reasonable to play for the most extreme example.
Most people don't have Roths because:
1. They're newer than traditional.
2. Folks don't understand them.
3. Many folks expect/need the tax break now will be of greater benefit than at retirement.
4. Sophisticated investors who are well aware of the rules and expect their tax rates will be lower in retirement so take the guaranteed tax break now and potentially larger balances susceptible to taxation at retirement.
Now - folks are using things like Roth IRAs as emergency funds and other advantages not strictly tied to retirement planning, but more as part of a broader strategy. Many folks are also doing back door Roths.
But, Roths are getting more popular with high savers, precisely because they do expect significant retirement income.
1
Posted on 1/14/19 at 1:40 pm to Ace Midnight
quote:
But I can't see how it is reasonable to play for the most extreme example.
I tend to agree but it is something to consider. Don't put everything in one spot, which is the point of this set of psots.
quote:
But, Roths are getting more popular with high savers, precisely because they do expect significant retirement income.
Roth are pretty amazing. The thing is the income limits on them really take away it as an option for most high income individuals, especially if they started saving for retirement before the Roth came around.
Posted on 1/14/19 at 3:54 pm to OleWarSkuleAlum
quote:
I’m more interested in if there’s an advantage of tax diversification of retirement assets.
The short answer is, yes, there is value of having the flexibility of before and after tax dollars for retirement. Not only does it hedge against changes to the tax code (e.g., tax rates going up or down), but also you get the flexibility of minimizing tax rate on the funds at withdrawal (and allows you to better manage the RMDs that vary depending on the savings vehicle).
Having pre- and post- tax gives you flexibility which has "value" but it is going to be difficult to put an actual dollar value to it until retirement time. The value can be thought of as an option where you get to optimize based on future information that is currently uncertain.
Any good financial adviser would recommend having multiple types of retirement vehicles as it provides for better tax planning. Most people in high tax brackets want the tax deduction on 401K monies today if their marginal rate is 35%+. In this scenario, you would then get tax diversification by investing in a Traditional IRA (and converting to a ROTH, "backdoor") and a brokerage account.
You are doing extremely well - if you continue on this pace for another 10-15 years you would be likely be able to FIRE by 45.
This post was edited on 1/14/19 at 4:00 pm
Posted on 1/14/19 at 6:46 pm to Zilla
quote:
My advice would be sure you are enjoying life... You are in the top 1% of retirement prep and doing EXTREMELY well....Spend a little money on yourself and raise your quality of life at this point...
I take all my excess money and dump it in my kids 529. Lol
Page 2 of 2
Popular
Back to top
Follow TigerDroppings for LSU Football News