Cut-Throat
Thinks s/he gets paid by the post
Anyone else have a 'problem' with ORP's "moving money to a roth" before RMD......
I have not put a boatload of time into ORP's "Optimal Retirement Withdrawal Strategy", but I have run his calculator a few times and overall it makes sense. Here ...... http://www.i-orp.com/
What he does is that you move your IRA assets into a Roth IRA, up to the 15% tax bracket. This is primarily done during the years between 60 and 70. Delaying SS to age 70, keeps income down and moving the regular IRA to a Roth IRA, does increase the Withdrawal Rate.
The only problem that I have with this is you are paying a lot of taxes (at the 15% level) during the years before S.S and RMD kicks in. The payoff of course are the years after age 70, when the taxes will be less as the RMD is lower and when S.S. kicks in.
One of the tenants of investing and saving that I have come across many times is the rule "Always defer taxes, as you may never have to pay them". ORPs method assumes that the Tax laws will remain the roughly same for 30 years out. If for instance that tax laws change and become more favorable for people that don't have $100 million in their IRAs, under ORPs plan, you may have paid more taxes than you needed to in the early years of retirement. Which would not be a good thing.
What are others thoughts on this "Paying more taxes early". Would you be comfortable paying more taxes early for the chance to pay less later?
I have not put a boatload of time into ORP's "Optimal Retirement Withdrawal Strategy", but I have run his calculator a few times and overall it makes sense. Here ...... http://www.i-orp.com/
What he does is that you move your IRA assets into a Roth IRA, up to the 15% tax bracket. This is primarily done during the years between 60 and 70. Delaying SS to age 70, keeps income down and moving the regular IRA to a Roth IRA, does increase the Withdrawal Rate.
The only problem that I have with this is you are paying a lot of taxes (at the 15% level) during the years before S.S and RMD kicks in. The payoff of course are the years after age 70, when the taxes will be less as the RMD is lower and when S.S. kicks in.
One of the tenants of investing and saving that I have come across many times is the rule "Always defer taxes, as you may never have to pay them". ORPs method assumes that the Tax laws will remain the roughly same for 30 years out. If for instance that tax laws change and become more favorable for people that don't have $100 million in their IRAs, under ORPs plan, you may have paid more taxes than you needed to in the early years of retirement. Which would not be a good thing.
What are others thoughts on this "Paying more taxes early". Would you be comfortable paying more taxes early for the chance to pay less later?
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