04-12-2015, 01:49 AM
Yea, I do have a tax pro but I never really discussed this being I just thought of it within the last week or so, maybe two at most.
Currently my saving tools are 401K tax deferred, Roth IRA and a brokerage account that I consider part of my retirement portfolio.
Not knowing what future taxes will be, I'm assuming most would say use a mix of retirement accounts to hedge yourself. I suppose my way of thinking is that there are many outlets to reduce your tax rate in retirement and if that's a reality then why give the government your taxes now just to contribute to a Roth? Why not defer those taxes while in the higher tax bracket. It's complicated because different investments are taxed differently.
Let's assume two tax brackets, married filing jointly.
Group A: 15% tax bracket 18 450 to 74 900 (Ordinary Dividends taxed at 15%) (Qualified Dividends taxed at 0%)
Group B: 25% tax bracket 74 900 to 151 200 (Ordinary Dividends taxed at 25%) (Qualified Dividends taxed at 15%)
My gut feeling is that most of us will fall into group A during our retirement years. Of course these are current tax rates.
This is something to definitely discuss with a CFP/tax consultant.
Currently my saving tools are 401K tax deferred, Roth IRA and a brokerage account that I consider part of my retirement portfolio.
Not knowing what future taxes will be, I'm assuming most would say use a mix of retirement accounts to hedge yourself. I suppose my way of thinking is that there are many outlets to reduce your tax rate in retirement and if that's a reality then why give the government your taxes now just to contribute to a Roth? Why not defer those taxes while in the higher tax bracket. It's complicated because different investments are taxed differently.
Let's assume two tax brackets, married filing jointly.
Group A: 15% tax bracket 18 450 to 74 900 (Ordinary Dividends taxed at 15%) (Qualified Dividends taxed at 0%)
Group B: 25% tax bracket 74 900 to 151 200 (Ordinary Dividends taxed at 25%) (Qualified Dividends taxed at 15%)
My gut feeling is that most of us will fall into group A during our retirement years. Of course these are current tax rates.
This is something to definitely discuss with a CFP/tax consultant.