Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Boston College says TIRA over Roth ???
Old 12-16-2020, 06:33 AM   #1
Thinks s/he gets paid by the post
RetireBy90's Avatar
 
Join Date: Feb 2009
Location: Cville
Posts: 1,251
Boston College says TIRA over Roth ???

Just read piece about a Boston College study Saying the general public might just be better with a traditional IRA and the tax deduction at your current rate.

https://www.marketwatch.com/story/do...?siteid=yhoof2
Quote:
Four-fifths of households in retirement will pay an effective tax rate of 0%, or nearly zero, write Boston College researchers Anqi Chen and Alicia Munnell (the director of the Center for Retirement Research, and a MarketWatch contributor) in a new paper. That includes federal and state income taxes.

Only those in the top fifth of retired households by income pay significant taxes, and even then the average rate for that group is only 11.3%, they calculate.

In the top 1% by income the average is 22.7%, they add.

I'm still telling the kids to put the money into Roth and converting the remaining TIRA to Roth this year and next. YMMV IMHO BYOB
__________________
FIRE 31 Aug, 2018 - Always leave every place better than you found it, always give more than expected
RetireBy90 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 12-16-2020, 07:22 AM   #2
Dryer sheet wannabe
 
Join Date: May 2005
Posts: 16
Quote:
Originally Posted by RetireBy90 View Post
Just read piece about a Boston College study Saying the general public might just be better with a traditional IRA and the tax deduction at your current rate.

https://www.marketwatch.com/story/do...?siteid=yhoof2



I'm still telling the kids to put the money into Roth and converting the remaining TIRA to Roth this year and next. YMMV IMHO BYOB
I think that anyone who cares enough about their assets and retirement savings to read this forum will likely have enough of a nest egg at retirement to make a ROTH worthwhile.
jazztbone is offline   Reply With Quote
Old 12-16-2020, 07:47 AM   #3
Full time employment: Posting here.
atmsmshr's Avatar
 
Join Date: Mar 2016
Location: An island off the coast of Florida. (Ok - if you really need to know it's Vero Beach)
Posts: 627
Just a early morning coffee swag, but I venture that five-thirds of this community forum are in the top one-fifth for the USA income profile.

Hence - approximating a proportionate IRA/Roth, particularly while young and starting out, and when recently retired - matters.
__________________
DW and I are 59/59. FIRE'd August 2019. Non-cola pension available but will remain untouched until mid sixties to grow, max SS for DH at FRA or 70. Mega retiree health available. IRA rollover from 401k Jan 2020 for NUA treatment. LTCG next few years. AA 40% stocks, 7% cash and 53% Intermediate Treasury fund. Rising equity glidepath.
atmsmshr is offline   Reply With Quote
Old 12-16-2020, 07:54 AM   #4
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Location: St. Charles
Posts: 2,621
Quote:
Originally Posted by atmsmshr View Post
Just a early morning coffee swag, but I venture that five-thirds of this community forum are in the top one-fifth for the USA income profile.

Hence - approximating a proportionate IRA/Roth, particularly while young and starting out, and when recently retired - matters.
Five-thirds? I think you need more coffee

But I think your point is correct.
__________________
If your not living on the edge, you're taking up too much space.
Never slow down, never grow old!
CardsFan is offline   Reply With Quote
Old 12-16-2020, 07:55 AM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
JoeWras's Avatar
 
Join Date: Sep 2012
Posts: 7,323
Looks like a case of the tail wagging the dog.

Study says people don't pay much tax in retirement. OK. Why? I say it is because they don't save enough in IRAs and 401ks.

Study suggests people should use tIRA. (Doesn't mention 401ks, but it should.) OK. Now what? If you save, you'll be paying later.

Just another example of the short term issue we have in this culture.
__________________
Retired Class of 2018


JoeWras is offline   Reply With Quote
Old 12-16-2020, 08:05 AM   #6
Full time employment: Posting here.
atmsmshr's Avatar
 
Join Date: Mar 2016
Location: An island off the coast of Florida. (Ok - if you really need to know it's Vero Beach)
Posts: 627
Quote:
Originally Posted by CardsFan View Post
Five-thirds? I think you need more coffee

But I think your point is correct.
Similar to the Car Talk guys telling listeners to stay tuned to the 'third-half' of the show.

Statistics and the truth. (you know the rest)
__________________
DW and I are 59/59. FIRE'd August 2019. Non-cola pension available but will remain untouched until mid sixties to grow, max SS for DH at FRA or 70. Mega retiree health available. IRA rollover from 401k Jan 2020 for NUA treatment. LTCG next few years. AA 40% stocks, 7% cash and 53% Intermediate Treasury fund. Rising equity glidepath.
atmsmshr is offline   Reply With Quote
Old 12-16-2020, 08:08 AM   #7
Thinks s/he gets paid by the post
RetireBy90's Avatar
 
Join Date: Feb 2009
Location: Cville
Posts: 1,251
Just to be clear, I only posted it as an outlier. I normally read any articles about IRAs and retirement savings, even if they don't remotely apply to me just to hear other points of view (Yes, often discarding ones such as the subject) and perhaps find another wrinkle to the subject.

If you are in a 0% bracket in retirement then you probably don't put any funds into an IRA either Roth or traditional.
__________________
FIRE 31 Aug, 2018 - Always leave every place better than you found it, always give more than expected
RetireBy90 is offline   Reply With Quote
Old 12-16-2020, 08:10 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
JoeWras's Avatar
 
Join Date: Sep 2012
Posts: 7,323
What's wrong with five thirds?
Attached Images
File Type: jpg 53.JPG (11.4 KB, 438 views)
__________________
Retired Class of 2018


JoeWras is offline   Reply With Quote
Old 12-16-2020, 08:23 AM   #9
Thinks s/he gets paid by the post
 
Join Date: Jan 2017
Posts: 1,635
Quote:
Originally Posted by jazztbone View Post
I think that anyone who cares enough about their assets and retirement savings to read this forum will likely have enough of a nest egg at retirement to make a ROTH worthwhile.
I've noticed this trend, too. My first post here was something about my "shoestring retirement." There used to be posts about re-using dryer sheets.

I think I have enough to get by. But it's highly unlikely that I'll be in a higher tax bracket when I start withdrawals than I am now. So, no Roth for me.

That's OK. I still learn a lot, maybe more, as the "poor boy" on the forum.
CaptTom is offline   Reply With Quote
Old 12-16-2020, 08:46 AM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 10,890
There is no "one size fits all", and I don't think the article is saying that either. For at least some of us here, deferring income (tIRA or 401K) was the right move because of high enough earnings putting us in a higher tax bracket than we'd be in during retirement, especially ER. I have no regrets.
RunningBum is offline   Reply With Quote
Old 12-16-2020, 08:48 AM   #11
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 47,841
Quote:
Originally Posted by JoeWras View Post
What's wrong with five thirds?
Ah, Fifth Third Bank.

I have some "vivid" memories of being a vendor to that bank and dealing with the president of one of their regions. One of the most unpleasant human beings I ever had the misfortune to encounter.
__________________
Numbers is hard

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 12-16-2020, 08:56 AM   #12
Moderator
braumeister's Avatar
 
Join Date: Feb 2010
Location: Flyover country
Posts: 18,184
Quote:
Originally Posted by REWahoo View Post
Ah, Fifth Third Bank.

I have some "vivid" memories of being a vendor to that bank and dealing with the president of one of their regions. One of the most unpleasant human beings I ever had the misfortune to encounter.
Interesting. We, and everyone we know here in their headquarters region, have an intense dislike for Fifth Third's operations. Worst customer "service" on the planet.
__________________
I thought growing old would take longer.
braumeister is offline   Reply With Quote
Old 12-16-2020, 08:57 AM   #13
Moderator
sengsational's Avatar
 
Join Date: Oct 2010
Posts: 8,131
Quote:
Originally Posted by JoeWras View Post
Looks like a case of the tail wagging the dog.

Study says people don't pay much tax in retirement. OK. Why? I say it is because they don't save enough in IRAs and 401ks.

Study suggests people should use tIRA. (Doesn't mention 401ks, but it should.) OK. Now what? If you save, you'll be paying later.

Just another example of the short term issue we have in this culture.
I didn't click into the article. I figured someone would explain it. And you did. I hate to give them the click just to find out it's a no-op.
sengsational is offline   Reply With Quote
Old 12-16-2020, 08:58 AM   #14
Recycles dryer sheets
 
Join Date: Feb 2019
Posts: 220
Quote:
Originally Posted by RunningBum View Post
There is no "one size fits all", and I don't think the article is saying that either. For at least some of us here, deferring income (tIRA or 401K) was the right move because of high enough earnings putting us in a higher tax bracket than we'd be in during retirement, especially ER. I have no regrets.
+1.

I was maxxing out 401k and spousal IRA during peak salary work years at a 22% marginal tax bracket.

Now in early retirement years I can ROTH convert at a 12% tax rate.
Born2Fish is offline   Reply With Quote
Old 12-16-2020, 09:05 AM   #15
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Location: St. Charles
Posts: 2,621
Quote:
Originally Posted by atmsmshr View Post
Similar to the Car Talk guys telling listeners to stay tuned to the 'third-half' of the show.

Statistics and the truth. (you know the rest)
I kinda figured that, but couldn't resist

On topic: While I wish I had more in Roth, the reality is that most of it went into the tIRA at 28+% marginal rate, so the deduction was worthwhile and, even with a rather large tIRA, odds are I will get most of it out, on average, at that rate or lower. So, no harm, no foul.

My recommendation to young workers would be to use Roth early on while you are lower income, and tIRA when you have higher income.
__________________
If your not living on the edge, you're taking up too much space.
Never slow down, never grow old!
CardsFan is offline   Reply With Quote
Old 12-16-2020, 09:08 AM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
JoeWras's Avatar
 
Join Date: Sep 2012
Posts: 7,323
Quote:
Originally Posted by braumeister View Post
Interesting. We, and everyone we know here in their headquarters region, have an intense dislike for Fifth Third's operations. Worst customer "service" on the planet.
Sorry I started a derail, I just always got a laugh out of their name. I'm like, why isn't it 1 and 2/3 bank? You know, I'm an engineer. A math thing.

They are trying to get a foothold in our region. I suspect the only customers there are the ones that got transferred. Never heard any excitement about them.
__________________
Retired Class of 2018


JoeWras is offline   Reply With Quote
Old 12-16-2020, 09:27 AM   #17
Full time employment: Posting here.
atmsmshr's Avatar
 
Join Date: Mar 2016
Location: An island off the coast of Florida. (Ok - if you really need to know it's Vero Beach)
Posts: 627
Quote:
Originally Posted by braumeister View Post
Interesting. We, and everyone we know here in their headquarters region, have an intense dislike for Fifth Third's operations. Worst customer "service" on the planet.
Fifth Third is our current mortgage holder. On my mind since we are refinancing a VA IRRL within the week. When I called their mortgage department, they declined to refinance my rate to the lowest. Onward-Ho to Quicken Loans!

(Yes - I am one of THOSE PEOPLE who never believed in early mortgage payoff, and that low interest serviceable debt on real estate is actually a good thing in the portfolio.)
__________________
DW and I are 59/59. FIRE'd August 2019. Non-cola pension available but will remain untouched until mid sixties to grow, max SS for DH at FRA or 70. Mega retiree health available. IRA rollover from 401k Jan 2020 for NUA treatment. LTCG next few years. AA 40% stocks, 7% cash and 53% Intermediate Treasury fund. Rising equity glidepath.
atmsmshr is offline   Reply With Quote
Old 12-16-2020, 09:41 AM   #18
Full time employment: Posting here.
 
Join Date: Feb 2007
Posts: 695
Quote:
Originally Posted by JoeWras View Post
Looks like a case of the tail wagging the dog.

Study says people don't pay much tax in retirement. OK. Why? I say it is because they don't save enough in IRAs and 401ks.

Study suggests people should use tIRA. (Doesn't mention 401ks, but it should.) OK. Now what? If you save, you'll be paying later.

Just another example of the short term issue we have in this culture.


Well said.... like most things in life, I think it comes down to culture. I was lucky... a friend helped to educate me when I was around 29... all the reason why... “HEY!!! You need to start investing!!!!”
My family was never really big into that. So it was not passed on to me. I fail to see why financial literacy cannot be taught at the HS level. Now there is a tax I would gladly pay...
armor99 is offline   Reply With Quote
Old 12-16-2020, 09:45 AM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 29,178
Quote:
Originally Posted by RetireBy90 View Post
Just read piece about a Boston College study Saying the general public might just be better with a traditional IRA and the tax deduction at your current rate.

https://www.marketwatch.com/story/do...?siteid=yhoof2



I'm still telling the kids to put the money into Roth and converting the remaining TIRA to Roth this year and next. YMMV IMHO BYOB
I think this would be true for the vast majority of retirees who have little in taxable savings and are mostly dependent on SS. They will likely have a lower tax rate once they stop working.

For high earners amassing large retirement portfolios, funding Roths can make sense, but you have to look carefully at your tax margin trade offs working versus retired.
__________________
Retired since summer 1999.
audreyh1 is online now   Reply With Quote
Old 12-16-2020, 09:55 AM   #20
Administrator
Gumby's Avatar
 
Join Date: Apr 2006
Posts: 16,585
Quote:
Originally Posted by RunningBum View Post
There is no "one size fits all", and I don't think the article is saying that either. For at least some of us here, deferring income (tIRA or 401K) was the right move because of high enough earnings putting us in a higher tax bracket than we'd be in during retirement, especially ER. I have no regrets.
Me neither. We put the majority of the money in our 401k/403b/457 plans when we were in the >35% federal marginal tax bracket (at one point 39.1%) and 7.5% state marginal tax bracket. I doubt we will ever see those rates again, so it was a win for us.
__________________
Living an analog life in the Digital Age.
Gumby is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Roth conversion with TIRA and non-deductible TIRA fh2000 FIRE and Money 15 10-11-2019 12:07 PM
Additional Roth vs tIRA / or Roth Conversion Consideration CRLLS FIRE and Money 0 05-17-2019 10:47 AM
Withdraw non-deducted TIRA contributions like a Roth? spncity FIRE and Money 0 04-14-2007 08:39 AM
ROTH TIRA withdrawals nun FIRE and Money 0 04-03-2006 09:06 AM

» Quick Links

 
All times are GMT -6. The time now is 07:05 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2021, vBulletin Solutions, Inc.