Yep. No RMDs in a Roth IRA for the life of the originator. Only for their beneficiary after their death.

One of the many benefits.

I stand corrected. However it is difficult to predict what the tax man is going to do in a few years.Never forget what money grabbers exist in our government. We will not always have a Republican in office.

quote:

Originally posted by bubbatime:

quote:

Originally posted by Fly-Sig:
Have all your accounts with one company if you can.

I still think there are some active Ponzi schemes out there that haven’t folded yet. Having all your eggs in one basket seems dangerous to me.

I'm in Fly-Sig's camp of simplifying retirement accounts with one company, generally a full-service brokerage house like Fidelity, Vanguard, and Charles Schwab. I names these as they have been around for a while. I wouldn't go with a newer brokerage like Ameritrade as they just got bought up by Schwab. I'm with Schwab just because I started with them.

The benefit of being with just one is to save your energy and time as you get older. I even use Quicken and tracking my different accounts within Schwab is time consuming as it is. When you have different accounts in different companies, you lose a couple of days when you transfer money from one place to another. I also keep tag each Account - Security combination for the time horizon I need it - This Year, Next Year, Following Year, Mid-Term, and Long-Term. When you start doing that, then having different brokerages add another layer of complexity.

bubbatime: ponzi schemes are scams where money from incoming investors are used to pay off the older investors to give the impression of high returns and the scammers skim off money.

Brokerage houses simply make money on the back-end by processing trade transactions. They don't make much money from this anymore as costs for most orders are zero. I remember paying $50 for each trade order then it went down to $35. They make money now on offering investment advisory services and portfolio management including computer programmed portfolio management.

My wife stopped working this year which will now allow me to invest in a Roth. This is pretty much a 3rd level of investments for me. I am 43 and I am going to max out this year with a Fidelity total stock market fund ITOT. This fund has out performed any other funds I own. I am willing to take more risk with this Roth.

quote:

Originally posted by ZSMICHAEL:
it is difficult to predict what the tax man is going to do in a few years.Never forget what money grabbers exist in our government.

Yup, the future of taxes is impossible to know. But my expectation is that the rates are not going to go down! And costs such as IRMAA and the taxes on Social Security are another factor. For many of us, our income doesn't really go down in retirement, it just comes from a different place. We withdraw from savings and we have investment income, rather than a paycheck. Thus our tax rate doesn't change unless we carefully arrange our finances.

The current $250k (single) or $500k (married) home sale exclusion is becoming ever easier to reach, meaning if we sell our home in retirement which we have owned for a couple of decades, we may easily have a "windfall" profit that is taxed, even though much of that gain may be inflation.

My preference is to shield as much from future taxes as possible, as long as the best guesses today don't show any big overall hit by paying taxes now rather than later. i.e. I'd rather pay taxes now on a ROTH conversion or ROTH contribution than have it in a 401k or IRA and pay taxes later.

I don't think there is any downside for the vast majority of workers to maximizing their ROTH contributions. ROTH conversions are also likely at the least break-even for a lot of people.

There is a big tax-trap for some people, specifically a surviving spouse who inherits an IRA. They now pay income taxes as a single person, and they have to take out the RMD Required Minimum Distribution for the inherited IRA as well as their own IRA (if they have one). So the taxes can suddenly be much higher.

quote:

Originally posted by ZSMICHAEL:
I stand corrected. However it is difficult to predict what the tax man is going to do in a few years.Never forget what money grabbers exist in our government. We will not always have a Republican in office.

Well, would you rather gamble and pay no known taxes today, but be on the hook for whatever shenanigans the tax man comes up with over the coming years/decades before your retire? That's a traditional IRA.


Or would you rather pay the known taxes today, and then be liable for zero unknown/likely higher taxes on your withdrawals in later years when you retire?

I vote the latter. And that's the whole point of a Roth IRA.



Plus, with a Roth, you don't have to worry about RMDs in retirement. And you can withdraw any of your contributions at any time, tax and penalty-free. No age or disaster requirements. (Not a smart move, as it impacts your future retirement, but a good backup fund if needed for a true emergency.)

Roth IRAs have a ton of good stuff going for them.

quote:

Originally posted by RogueJSK:
Roth IRAs have a ton of good stuff going for them.

It is certainly possible that greedy and desperate legislators could change the rules for Roth IRAs taking away some of the advantages (no tax, no RMD, probably others not immediately leaping to mind) and make them more like traditional IRAs, but I sure would *NOT* expect that to be the first thing they did.

It would seem a lot like breach of contract. “Yeah, I know we said that if you paid the tax up front we would not tax on the withdrawal, but we’re having trouble paying for our junkets, so we’re double taxing you exactly like we said we weren’t gonna.” That might not result in legislators decorating lampposts, but I doubt it would increase (their) campaign contributions.

Based on the rules as they stand, Roth IRAs make tremendous sense, especially if you can do partial conversions in a way that minimizes the tax on the conversion. Sure, the rules could change making them less advantageous, but anything could happen, including para’s comet showing up before one retires. At some point one has to look at things as they are and make decisions based on that instead of a panoply of what ifs.

Anything is possible fellas.

The world could end tomorrow and I didn’t buy that M1A I always want.

But let’s play the sensible game. It tends to make the most sense. I want to pay taxes NOW when I know I can afford them.

I first opened an account at Vanguard, they pissed me off with the difficulty of depositing money in to the account. I stopped contributing to it

I went to Fidelity and have been very happy there, I have a nice chunk in a few of Fidelity's mutual funds that have done very well