Diversification of Accounts Between Taxable, Tax Deferred, and Tax Free

[Rich_by_the_Bay]

Ha, I'm about 75% tax sheltered. I'll take my first substantial income drop next year and the following year due to a fade-out rather than a cold-turkey retirement strategy.

My initial thought for then was to fill up the 15% bracket with Roth conversions but as I think it through I might even take my chances on filling the 25% bracket. As Finance Dude points out it's a bit of risk management choice, dependent on future tax brackets.

I figure that even in a bad case scenario, withdrawing at 25% tax rate won't kill me and is, in fact, a very nice way to shore up the inheritance for the heirs. So I'll probably lean toward heavier Roth conversions once the income allows.

[REWahoo]

Quote:

Originally Posted by Rich_in_Tampa ...due to a fade-out rather than a cold-turkey retirement strategy.

We all thought it was a "cold feet" retirement strategy...

[lowflyer]

Interesting topic. We are:

70% Tax deferred
30% Taxable
Considering starting Roth conversion this year

[rescueme]

88% Tax Deferred (e.g. TIRA's).
11% Tax Free (Roth's)
1% Taxable

This is the curent breakdown of those monies considerd for retirement only - not funds outside of that classification nor other assets held.

Since we expect most of our Tax Deferred accounts to go to our named non-profit charities upon our passing and assuming tax laws remain the same, there is no reason to worry about converting them. I would rather they use the $$$ upon our passing, rather than the tax man ...

[Rustward]

51% Tax Deferred
48% Taxable
1% Tax Free

[IBWino]

33% tax deferred
67% taxable

Our income is currently too high to contribute to a Roth, but we intend to start shifting assets into Roths after we (hopefully) retire in 5 years.

[FurBall]

69% taxable
31% tax deferred
0% tax free

This year the tax rate may finally be low enough due to ramping down part-time consulting to allow starting some Roth conversion.

[powerplay]

42% tax deferred
18% tax free
40% taxable

This has been an interesting thread.

[ronin]

24% Taxable Equities
32% Munis in the taxable acct
32% 403b/TIRA
12% Roth IRA

Still contributing to TIRA from early retirement incentive buyout (5 yr. payout rolled to IRAs). Probably begin Roth conversions in Jan.

[haha]

Quote:

Originally Posted by powerplay 42% tax deferred 18% tax free 40% taxable This has been an interesting thread.

Very large distibution/allocation/differences among members!

Ha

[rockyj]

Of investments and cash earmarked for income in retirement:

Tax deferred 33.00%
Tax free (Roth) 18.37%
Taxable 48.63%

Does not include personal real estate or other items not earmarked for income. Also, for perspective, the above will be used for between 40 and 50% of retirement income -the rest from pension.

Like many others, I will likely fill up lower tax brackets when possible with Roth conversions to incrementally take money off the tax table, perhaps reduce future RMDs, and position better for estate purposes.

[LOL!]

We saw on the Roth-conversion thread that many folks have tax-deferred assets that are really tax-free assets since those assets will be accessed via the 0% tax-bracket.

[Alan]

48% Tax Def.
3% Roth.
49% Taxable

This year was first time ever able to either contribute or convert to Roth.

[JohnDoe]

Quote:

Originally Posted by rescueme 88% Tax Deferred (e.g. TIRA's). 11% Tax Free (Roth's) 1% Taxable

Almost identical...

88% Tax Deferred
9% Tax Free (Roth's)
3% Taxable

I just don't have the income to increase the taxable yet.

[sn2792]

95% Tax Deferred
5% Taxable

Retired in July and DH's last day is this Friday, so next year will be first year to withdraw from investments. Should be in 15% tax bracket which is much lower than what we are now.

[yakers]

76% tax deferred (IRA/TSP)
8% tax free (Roth IRA)
8% taxable stocks
8% cash (credit union)

piddling amounts in ibonds & gold coins

DW retired 4 years ago & I retired 2 years ago, total portfolio finally back up to its high in 2007

[scrinch]

64% tax-deferred
36% taxable
<1% tax-free

We've been in the 33% bracket for a while and so haven't contributed to a Roth in a long time...and no conversion either. I'm thinking of going back to w*rk full time again for another 5 years, and am considering contributing to a Roth 401k this time instead of pre-tax money.

[jayc]

48% tax
48% tax defer
4% roth

No plans to convert to roth, just yearly contributions.

[TromboneAl]

Taxable: 19%
Tax-deferred: 73%
Roth: 7.6%

Note that, unlike asset allocation (stocks/bonds/cash), this distribution is largely involuntary. That is, most of us put as much as possible into tax-deferred investments.

Those of us with the highest tax deferred percentages, are probably those with access to SEP-IRAs or other special retirement vehicles.

[REWahoo]

Quote:

Originally Posted by TromboneAl Note that, unlike asset allocation (stocks/bonds/cash), this distribution is largely involuntary. That is, most of us put as much as possible into tax-deferred investments.

+1

The percentages are largely a function of individual employment circumstances and what saving/investment vehicles are/were available to you.