Dividends in Roth ira or taxable account?

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B-rad
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Dividends in Roth ira or taxable account?

Post by B-rad »

I assume tax deferred, but I have tired head and can't remember .

Thanks
deikel
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Re: Dividends in Roth ira or taxable account?

Post by deikel »

https://www.investopedia.com/ask/answer ... axable.asp

Depends on how you have to pay taxes on them, if at all, in the taxable account.
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CyclingDuo
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Re: Dividends in Roth ira or taxable account?

Post by CyclingDuo »

B-rad wrote: Mon Oct 11, 2021 8:34 pm I assume tax deferred, but I have tired head and can't remember .

Thanks
Non qualified dividends and dividends from REITs would be my choice to place in Roth IRA's compared to holding them in a taxable account.
"Save like a pessimist, invest like an optimist." - Morgan Housel
dbr
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Re: Dividends in Roth ira or taxable account?

Post by dbr »

Roth income is not tax deferred; it is tax exempt. The conclusion is the same.

Contributions to a Roth are not tax deferred but fully taxable before contributing. Sometimes because the act of making the Roth contribution is not itself taxed one forgets that one has paid tax on the income received to make that asset exist.
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B-rad
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Re: Dividends in Roth ira or taxable account?

Post by B-rad »

CyclingDuo wrote: Tue Oct 12, 2021 8:49 am
B-rad wrote: Mon Oct 11, 2021 8:34 pm I assume tax deferred, but I have tired head and can't remember .

Thanks
Non qualified dividends and dividends from REITs would be my choice to place in Roth IRA's compared to holding them in a taxable account.

Man I still have a ton to learn . I don't know what any of that means .
Da5id
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Re: Dividends in Roth ira or taxable account?

Post by Da5id »

OP, I suggest you read https://www.bogleheads.org/wiki/Tax-eff ... _placement

It mentions the issues of dividends as well. Like many things, it is a bit complicated and "it depends". Presumably you have limited Roth space. You have to look at fund placement in the context of your whole portfolio and what other funds you are trying to place.
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CyclingDuo
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Re: Dividends in Roth ira or taxable account?

Post by CyclingDuo »

B-rad wrote: Wed Oct 13, 2021 8:23 am
CyclingDuo wrote: Tue Oct 12, 2021 8:49 am
B-rad wrote: Mon Oct 11, 2021 8:34 pm I assume tax deferred, but I have tired head and can't remember .

Thanks
Non qualified dividends and dividends from REITs would be my choice to place in Roth IRA's compared to holding them in a taxable account.

Man I still have a ton to learn . I don't know what any of that means .
You are doing great, no worries. You will have a pension. You are socking away money in your 457b. You are figuring out the difference between managing your own investments vs. paying an AUM fee. You are asking about where to place investments that pay dividends for tax purposes. It's all good.

A qualified dividend vs. non qualified dividend explained: https://kahnlitwin.com/blogs/tax-blog/d ... -dividends

REITs in a Roth IRA: https://www.fool.com/investing/2021/08/ ... -roth-ira/

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel
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goodenyou
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Re: Dividends in Roth ira or taxable account?

Post by goodenyou »

B-rad wrote: Wed Oct 13, 2021 8:23 am
CyclingDuo wrote: Tue Oct 12, 2021 8:49 am
B-rad wrote: Mon Oct 11, 2021 8:34 pm I assume tax deferred, but I have tired head and can't remember .

Thanks
Non qualified dividends and dividends from REITs would be my choice to place in Roth IRA's compared to holding them in a taxable account.

Man I still have a ton to learn . I don't know what any of that means .
Non-qualified = Taxed at INCOME TAX rates (not usually preferred)
Qualified = Taxed at CAPITAL GAINS TAX rates (sometimes preferred)

It depends on your marginal tax rates (how much money you earn per year). If you make a lot of money, you are in a high income tax bracket. Currently tax rates are lower for CAPITAL GAINS rates (long term-held for more than one year). Thus, better for QUALIFIED dividends. Who knows what's in store for us in current tax legislation passes. In Roth, you are NOT taxed on gains or dividends. So, higher tax rates don't matter.
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