 Quote:
|
Originally Posted by LOL!
Furthermore, as high wage earner and ueber-investor, you will have significant after-tax investments that you can use in retirement. Withdrawal from those investments will be taxed less as well because some of it will be return of principle and right now both capital gains tax rates and qualififed dividend tax rates are lower than your marginal income tax rate.
Finally, you can always convert some funds to a RothIRA in the future when your tax rate is lower.
|
This is the strategy I am planning on using. I should also add that I don't have the option yet of a Roth 401k. I am saving money in an after tax account in addtion to the 401k and Roth. My first four years of retirement will be funded by I bonds, so my tax rate will probably be zero. I think this will be a good opportunity to roll over some of my 401k money each of the four years into a Roth account up to the 15% bracket. I'll use the after tax money to pay for the additional taxes.
That will allow me to take the tax deduction of the 401k while I'm in my high income years and convert to a Roth while my income is low.
Be sure and pay attention to the AMT. If you lose the contribution to your 401k, your AGI may trigger the AMT.
BTW, I appreciate your statement of creating yet another retirement account. I'm trying to keep everything as simple as possible and yet it still seems overwhelming to keep track of all the accounts and the different rules that apply to each one.
-helen
|