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Old 01-05-2019, 12:25 PM   #41
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It would seem as we get older and we start the RMD we would be worth less because of paying taxes on that money and inflation etc..

What is your thoughts going off of history?
Your math is correct street, but if you reinvest the remainder cash (after taxes), it can actually increase your NW in the long term. Or, you can spend it on fun things and have a happier retirement. Options during retirement are wonderful.
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Old 01-08-2019, 07:39 PM   #42
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RMD generates taxes. That's the point of a tax DEFERRED ACCOUNT. The tax code is progressive and RMD is progressive so your portfolio is being drained double time with the tax money going to the government. When you die, your wife goes to filing single one deduction and she's really going to get the shaft. She looses you, a deduction, your share of SS income and gets taxed at a higher rate to boot. If you Roth convert the taxes get paid up front and the money grows unmolested by taxes and progressive RMD and your wife gets the money tax free. Depending on your rate of return the conversion can be more or less efficient and the time it takes for the Roth's value to over take the TIRA is variable but the Roth always wins eventually if you live long enough. If you don't live long enough you don't care, you're dead, but your wife may be able to jigger a lower tax with the flexibility it provides
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Old 01-09-2019, 02:58 PM   #43
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Originally Posted by Doc0 View Post
RMD generates taxes. That's the point of a tax DEFERRED ACCOUNT. The tax code is progressive and RMD is progressive so your portfolio is being drained double time with the tax money going to the government. When you die, your wife goes to filing single one deduction and she's really going to get the shaft. She looses you, a deduction, your share of SS income and gets taxed at a higher rate to boot. If you Roth convert the taxes get paid up front and the money grows unmolested by taxes and progressive RMD and your wife gets the money tax free. Depending on your rate of return the conversion can be more or less efficient and the time it takes for the Roth's value to over take the TIRA is variable but the Roth always wins eventually if you live long enough. If you don't live long enough you don't care, you're dead, but your wife may be able to jigger a lower tax with the flexibility it provides
All good points to ponder and good reasons to consider Roth conversions before RMDs kick in. The good news/bad news in my case is two fold: As I made Roth conversions, my accounts tended to outgrow what I converted. Secondly, I simply had too much (in my 401(k)) to get all of it converted. I did, however, accomplish one of my goals in converting to Roths. Both DW and I converted ALL of our tIRAs to Roths. That simplifies RMD calcs. because my only remaining deferred account is my 401(k). In fact, the 401(k) manager sends me a "note" each year, telling me exactly how much RMD I must take to satisfy the regs. Simple! I'm now taking RMDs and it's working out okay. I would (so far) be taking that amount (or more) from the 401(k) anyway - to live on. Obviously, I don't even touch my Roths at this point. My "estate" plan is to pass my Roths to DW. The 401(k), I'm trying to chip away at with my RMDs - but it keeps growing. DW will just have to pay the taxes - or find some young boy-toy tax deduction after I'm gone. Like I said, good news/bad news so YMMV.
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Old 01-09-2019, 03:17 PM   #44
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You have some control on your tax deferred account growth by adjusting the AA to a lower return therefore reducing SORR and leaving you a longer period of head room in your current tax bracket.. It boils down to take a bunch of risk and pay the proceeds to Uncle Sam if you win or turn down the volume a bit reduce your risk and enjoy the ride.
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