04-12-2015, 03:42 PM
I don't think I can add to the quality of this discussion, but I will add some quantity. I decided to go full Roth, and the excess of what I can contribute goes to a taxable account, for these reasons.
1. The idea of RMDs appeals to me not a bit. When I retire I should be able to decide when, if, and how much I withdraw.
2. I use my Roth IRA to hold REITs, and other securities that pay out distributions with mixed classifications, including ordinary income, capital gains and Return of Capital (which adjusts your cost basis). I like the fact that I will never have to sort out the tax implications of these distributions. With a traditional IRA, at some point I imagine you'd have to tabulate decades of mixed classifications, each of which is different for each security each year. Sure it can be tracked over time, but there's still something comforting about having all tax implications behind me.
3. Ordinary income from REIT distributions could really add up, if you are successful enough to retire with a large account balance, and if you rotate into higher yield at that time. Enough ordinary income could realistically put you in a higher tax bracket if it's not in a Roth IRA, forcing you to look for income elsewhere.
4. The argument that your tax bracket should be low in retirement applies equally to a taxable account as to a traditional IRA. Given that I use a Roth for the reasons above, I'm hoping that in 30 years I will be able to realize gains and dividends from my taxable account in retirement with little consequence.
1. The idea of RMDs appeals to me not a bit. When I retire I should be able to decide when, if, and how much I withdraw.
2. I use my Roth IRA to hold REITs, and other securities that pay out distributions with mixed classifications, including ordinary income, capital gains and Return of Capital (which adjusts your cost basis). I like the fact that I will never have to sort out the tax implications of these distributions. With a traditional IRA, at some point I imagine you'd have to tabulate decades of mixed classifications, each of which is different for each security each year. Sure it can be tracked over time, but there's still something comforting about having all tax implications behind me.
3. Ordinary income from REIT distributions could really add up, if you are successful enough to retire with a large account balance, and if you rotate into higher yield at that time. Enough ordinary income could realistically put you in a higher tax bracket if it's not in a Roth IRA, forcing you to look for income elsewhere.
4. The argument that your tax bracket should be low in retirement applies equally to a taxable account as to a traditional IRA. Given that I use a Roth for the reasons above, I'm hoping that in 30 years I will be able to realize gains and dividends from my taxable account in retirement with little consequence.