BHers, what is your Roth IRA %?

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infotrader
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BHers, what is your Roth IRA %?

Post by infotrader » Wed Jan 09, 2019 1:17 pm

We have been trying to boost the % of our Roth IRA balance.
DW and I (61 and 58) plan to retire in two years, and have over 600k in Roth, and about 2.4 m in tax deferred accounts.
Our plan is to convert as much as possible. My question is: is there an ideal % for the tax deferred balance when RMD starts in 10 years?
P.S. we don't plan to use the money for retirement, since we have pensions, etc. to cover our living costs and taxes.
Last edited by infotrader on Wed Jan 09, 2019 3:02 pm, edited 1 time in total.

Glockenspiel
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Re: BHers, what is your Roth IRA %?

Post by Glockenspiel » Wed Jan 09, 2019 1:24 pm

Current Roth IRA % is 38.2%. We also have an additional 6.0% of our portfolio in a tax-free HSA account. Wife and I are both early-mid 30s, but I would like to think somewhere between 25-75% of portfolio in tax deferred accounts is ideal.

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Re: BHers, what is your Roth IRA %?

Post by Darth Xanadu » Wed Jan 09, 2019 1:28 pm

My tax-free balances are currently ~41% of my portfolio (Roth IRA, Roth 401k, and HSA).

My goal over time is to end up with approx 1/3 each in tax-free, tax-deferred, and taxable, to provide maximum flexibility for managing tax liabilities in (and potentially beyond, i.e. legacy) retirement.
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Darth Xanadu
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Re: BHers, what is your Roth IRA %?

Post by Darth Xanadu » Wed Jan 09, 2019 1:30 pm

infotrader wrote:
Wed Jan 09, 2019 1:17 pm
My question is: is there an ideal % for the tax deferred balance when RMD starts in 10 years?
I haven't thought too much yet about this (I'm early 40s) but I would think trying to get RMD to the point where that, plus other taxable income, puts you 5%-15% below the top of your targeted tax bracket would be ideal. So, less of a % goal and more of $ goal.
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RickBoglehead
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Re: BHers, what is your Roth IRA %?

Post by RickBoglehead » Wed Jan 09, 2019 1:32 pm

Several years from retirement. 66% of our assets are taxable, 34% retirement (which represents 10+ years of estimated retirement spending, which puts us into Social Security at 70).

Of the retirement funds, 88% are ROTH. We expect to have all the non-ROTH converted to ROTH within the first few years of retirement.
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Re: BHers, what is your Roth IRA %?

Post by hawkfan55 » Wed Jan 09, 2019 1:41 pm

is there an ideal % for the tax deferred balance when RMD starts in 10 years?
There is not a standard "rule of thumb" for a percentage of your portfolio to be tax deferred. There is a mix of tax deferred, tax free (Roth) and taxable funds that would be ideal for each individual investor given their unique financial situation.
I would suggest use of the Optimal Retirement Planner calculator, www.i-orp.com. Use the Extended Version. This tool is easy to use, takes into account your savings, investments, income sources such as earned income, SS, pensions, and taxes to develop an optimal spending plan unique for your situation. You can change your variables to determine a financial plan that minimizes taxes while optimizing spending. I've found it to be very useful.
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livesoft
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Re: BHers, what is your Roth IRA %?

Post by livesoft » Wed Jan 09, 2019 1:43 pm

We were not Roth eligible until a few years ago, so Roths are under between 5% and 10% of total assets.

One could say that for anyone over age 59.5, 100% Roth would be optimal if one could have put all the money in them without paying taxes. :twisted: But that's not the case for most people, so I don't think there is any optimal percentage to shoot for. One's personal circumstances are going to dictate where one ends up on the Roth fraction in their total portfolio.
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Re: BHers, what is your Roth IRA %?

Post by JimmyD » Wed Jan 09, 2019 1:48 pm

Out of our $450K portfolio, 25% of that is in our Roths. We're both in our mid-30's.

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Darth Xanadu
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Re: BHers, what is your Roth IRA %?

Post by Darth Xanadu » Wed Jan 09, 2019 1:58 pm

RickBoglehead wrote:
Wed Jan 09, 2019 1:32 pm

Of the retirement funds, 88% are ROTH. We expect to have all the non-ROTH converted to ROTH within the first few years of retirement.
Presumably, you'd want at least SOME taxable income every year, to at least take advantage of deductions.
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Leif
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Re: BHers, what is your Roth IRA %?

Post by Leif » Wed Jan 09, 2019 2:00 pm

I'm doing Roth conversions on a quarterly basis.

I have about 20% of my IRA money in tax exempt.
Last edited by Leif on Wed Jan 09, 2019 3:36 pm, edited 4 times in total.

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Re: BHers, what is your Roth IRA %?

Post by wolf359 » Wed Jan 09, 2019 2:00 pm

infotrader wrote:
Wed Jan 09, 2019 1:17 pm
We have been try to boost the % of our Roth IRA balance.
DW and I (61 and 58) plan to retire in two years, and have over 600k in Roth, and about 2.4 m in tax deferred accounts.
Our plan is to convert as much as possible. My question is: is there an ideal % for the tax deferred balance when RMD starts in 10 years?
P.S. we don't plan to use the money for retirement, since we have pensions, etc. to cover our living costs and taxes.
This is one of those times when you may want to pay a fiduciary financial advisor to review your numbers and optimize a plan to achieve your goals.

Off the top of my head, if you don't need to use your tax deferred accounts for retirement, then you may want to retire BEFORE your pensions kick in. Use the lack of income to convert as much of the tax deferred accounts as possible at as low of a tax rate as possible. You may want to consider doing so now, before the Trump tax cuts expire in 2025. You won't be able to convert all of the money in the next 6 years, but you might plan it out between now and when the RMDs kick in. Waiting two years puts more of the conversion window into a higher tax bracket. At the very least, you may want to start building up your taxable assets (to be able to pay taxes without using the tax deferred accounts) and to contribute only to Roth 401-k if you're not doing so already. (This increases your taxes in the short term, but allows you to get more funds into the Roth under current tax rates. We really don't have enough information to make this recommendation, so just consider whether or not it makes sense for your situation.)

Your pensions will increase your income (and your taxes.) So will Social Security. There are a lot of potential complications, which is why it may be worth the money to pay for a professional plan. The savings should exceed the cost of the consultation.

xenochrony
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Re: BHers, what is your Roth IRA %?

Post by xenochrony » Wed Jan 09, 2019 2:05 pm

0% of total retirement assets. Early 50s in age.

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happymob
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Re: BHers, what is your Roth IRA %?

Post by happymob » Wed Jan 09, 2019 2:15 pm

Darth Xanadu wrote:
Wed Jan 09, 2019 1:28 pm
My tax-free balances are currently ~41% of my portfolio (Roth IRA, Roth 401k, and HSA).

My goal over time is to end up with approx 1/3 each in tax-free, tax-deferred, and taxable, to provide maximum flexibility for managing tax liabilities in (and potentially beyond, i.e. legacy) retirement.
75% of our net worth is taxable of various sorts (including grass and farm land which is well above cost basis). Of the tax-preferred accounts, I would also like to get it to 50/50 eventually. What is working against us now is the need to contribute to traditional tax-deferred plans to knock us down to the 12% tax bracket each year. We'll have a few/many years to convert traditional into Roth post-retirement, pre-RMD).

Where we stand now on tax-preferred is 57% Traditional / 38% Roth / 5% other tax-free (HSA and 529), so we aren't far from the desired mix.

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infotrader
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Re: BHers, what is your Roth IRA %?

Post by infotrader » Wed Jan 09, 2019 2:24 pm

wolf359 wrote:
Wed Jan 09, 2019 2:00 pm
infotrader wrote:
Wed Jan 09, 2019 1:17 pm
We have been try to boost the % of our Roth IRA balance.
DW and I (61 and 58) plan to retire in two years, and have over 600k in Roth, and about 2.4 m in tax deferred accounts.
Our plan is to convert as much as possible. My question is: is there an ideal % for the tax deferred balance when RMD starts in 10 years?
P.S. we don't plan to use the money for retirement, since we have pensions, etc. to cover our living costs and taxes.
This is one of those times when you may want to pay a fiduciary financial advisor to review your numbers and optimize a plan to achieve your goals.

Off the top of my head, if you don't need to use your tax deferred accounts for retirement, then you may want to retire BEFORE your pensions kick in. Use the lack of income to convert as much of the tax deferred accounts as possible at as low of a tax rate as possible. You may want to consider doing so now, before the Trump tax cuts expire in 2025. You won't be able to convert all of the money in the next 6 years, but you might plan it out between now and when the RMDs kick in. Waiting two years puts more of the conversion window into a higher tax bracket. At the very least, you may want to start building up your taxable assets (to be able to pay taxes without using the tax deferred accounts) and to contribute only to Roth 401-k if you're not doing so already. (This increases your taxes in the short term, but allows you to get more funds into the Roth under current tax rates. We really don't have enough information to make this recommendation, so just consider whether or not it makes sense for your situation.)

Your pensions will increase your income (and your taxes.) So will Social Security. There are a lot of potential complications, which is why it may be worth the money to pay for a professional plan. The savings should exceed the cost of the consultation.
That is a good advice. This what I have been thinking: to create a period with low taxable income.
Our mistake in the past was that we did too much tax deferred contribution without considering the effect of pensions in retirement.
Last edited by infotrader on Wed Jan 09, 2019 2:52 pm, edited 1 time in total.

MathWizard
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Re: BHers, what is your Roth IRA %?

Post by MathWizard » Wed Jan 09, 2019 2:27 pm

We are at about 20% of our portfolio in ROTH the rest in taxable
(not counting first tier EF in savings account), the same as you, as similar ages.

I'm surprised that you were able to get $600K in your ROTHs. Was some of this from ROTH 401K
or from ROTH conversions (or backdoor ROTH)?

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Re: BHers, what is your Roth IRA %?

Post by Daryl » Wed Jan 09, 2019 2:36 pm

Tax Free: 64% (Roth + HSA)
Tax Deferred: 30% (401K)

I switched all future contributions to tax deferred accounts. A large Roth balance means I could be in a very low tax bracket in retirement.

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infotrader
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Re: BHers, what is your Roth IRA %?

Post by infotrader » Wed Jan 09, 2019 2:41 pm

MathWizard wrote:
Wed Jan 09, 2019 2:27 pm
We are at about 20% of our portfolio in ROTH the rest in taxable
(not counting first tier EF in savings account), the same as you, as similar ages.

I'm surprised that you were able to get $600K in your ROTHs. Was some of this from ROTH 401K
or from ROTH conversions (or backdoor ROTH)?
You are right. We use the backdoor Roth approach.

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Re: BHers, what is your Roth IRA %?

Post by jhfenton » Wed Jan 09, 2019 2:49 pm

Our retirement assets are currently:

31.4% Tax-free (Roth + HSA)
68.0% Pre-tax
0.6% Taxable

And with us both turning 50 next year--and two kids currently in high school who will be in college in a few years--it's pretty much guaranteed that we're going to hit retirement in our early 60's with 7 figures in tax-free and pre-tax assets and next to nothing outside retirement accounts. We'll probably do significant Roth conversions between 62 and 70, but I'll have to do the math when we get there. (We're 48 right now.)

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Re: BHers, what is your Roth IRA %?

Post by trevorshhh » Wed Jan 09, 2019 2:54 pm

Image

This is my breakdown of Roth (10% is Roth 401k and 90% is Roth IRA) and pre-tax (all 401k). And I have just started to contribute to a taxable account.

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Re: BHers, what is your Roth IRA %?

Post by k3vb0t » Wed Jan 09, 2019 2:59 pm

66% Roth/Roth 401k
33% tIRA/401k

But I'm about 25 years behind you

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celia
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Re: BHers, what is your Roth IRA %?

Post by celia » Wed Jan 09, 2019 3:27 pm

livesoft wrote:
Wed Jan 09, 2019 1:43 pm
We were not Roth eligible until a few years ago, so Roths are under between 5% and 10% of total assets.
EVERYONE is eligible to convert.

I started converting like crazy while we were working during the 2008 market drop when I saw the share prices drop significantly. To me, that meant "Roth conversion taxes" were on sale, since you'd only have to pay half the conversion taxes when the share price was half its usual price! We finished converting all our traditional IRAs in early retirement and drew down most of our Inherited IRAs before starting SS.

We didn't have as much in traditional IRAs as others here because we put contributions into Roths primarily once they became available. I saw it as paying $x in taxes for the year of the contribution vs. a multiple of that at withdrawal in the future (after the account grew). The dollar amount of taxes was more significant to me than the tax rate since we paid the taxes out of extra income we didn't need for living expenses. (We also used some of the tax-deferred accounts to buy extra years of service credit to increase our pensions which will be taxed at a more uniform payout than RMDs would have been.)
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.

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infotrader
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Re: BHers, what is your Roth IRA %?

Post by infotrader » Wed Jan 09, 2019 3:36 pm

celia wrote:
Wed Jan 09, 2019 3:27 pm
livesoft wrote:
Wed Jan 09, 2019 1:43 pm
We were not Roth eligible until a few years ago, so Roths are under between 5% and 10% of total assets.
EVERYONE is eligible to convert.

I started converting like crazy while we were working during the 2008 market drop when I saw the share prices drop significantly. To me, that meant "Roth conversion taxes" were on sale, since you'd only have to pay half the conversion taxes when the share price was half its usual price! We finished converting all our traditional IRAs in early retirement and drew down most of our Inherited IRAs before starting SS.

We didn't have as much in traditional IRAs as others here because we put contributions into Roths primarily once they became available. I saw it as paying $x in taxes for the year of the contribution vs. a multiple of that at withdrawal in the future (after the account grew). The dollar amount of taxes was more significant to me than the tax rate since we paid the taxes out of extra income we didn't need for living expenses. (We also used some of the tax-deferred accounts to buy extra years of service credit to increase our pensions which will be taxed at a more uniform payout than RMDs would have been.)
Can you convert a position in traditional IRA directly to Roth on a market down day?

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Re: BHers, what is your Roth IRA %?

Post by celia » Wed Jan 09, 2019 3:41 pm

Leif wrote:
Wed Jan 09, 2019 2:00 pm
I have about 20% of my IRA money in tax exempt.
That placement is unnecessary since the money is not taxed while it is in the IRA. When it is withdrawn, it is taxed as ordinary income, not tax-exempt.

I suggest putting the tax-exempt funds in your taxable account instead, where the tax-exempt status of the fund will be useful.

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Re: BHers, what is your Roth IRA %?

Post by Broken Man 1999 » Wed Jan 09, 2019 3:49 pm

Roth accounts = 5.8793% of portfolio.

Taxable = $27.57. The taxable account will most likely grow when we start our RMDs, as I don't think we will spend all of the required distributions. Though, RMDs are 4+ years in the future, so who knows?

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Re: BHers, what is your Roth IRA %?

Post by Snowjob » Wed Jan 09, 2019 3:49 pm

About 45% Roth / 25% Taxable / 30% Tax Deferred.

I think a mix is probably the most efficient, based on savings going on the contribution side, and then have most of your high return assets in your Roth so you can expand that space as much as possible over your working career.

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Re: BHers, what is your Roth IRA %?

Post by triceratop » Wed Jan 09, 2019 3:50 pm

About 10% of my net assets are in Roth IRAs; the rest is in taxable. I was Roth-ineligible for the previous 4 years which made me sad. But I have about 45 years before I have to worry about RMDs.
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Re: BHers, what is your Roth IRA %?

Post by latesaver » Wed Jan 09, 2019 3:51 pm

celia wrote:
Wed Jan 09, 2019 3:27 pm
livesoft wrote:
Wed Jan 09, 2019 1:43 pm
We were not Roth eligible until a few years ago, so Roths are under between 5% and 10% of total assets.
EVERYONE is eligible to convert.

I started converting like crazy while we were working during the 2008 market drop when I saw the share prices drop significantly. To me, that meant "Roth conversion taxes" were on sale, since you'd only have to pay half the conversion taxes when the share price was half its usual price! We finished converting all our traditional IRAs in early retirement and drew down most of our Inherited IRAs before starting SS.

We didn't have as much in traditional IRAs as others here because we put contributions into Roths primarily once they became available. I saw it as paying $x in taxes for the year of the contribution vs. a multiple of that at withdrawal in the future (after the account grew). The dollar amount of taxes was more significant to me than the tax rate since we paid the taxes out of extra income we didn't need for living expenses. (We also used some of the tax-deferred accounts to buy extra years of service credit to increase our pensions which will be taxed at a more uniform payout than RMDs would have been.)
i would never have thought about that strategy (converting when the market crashes). maybe it's something that is more apparent in the midst of that type of situation.

livesoft
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Re: BHers, what is your Roth IRA %?

Post by livesoft » Wed Jan 09, 2019 3:52 pm

celia wrote:
Wed Jan 09, 2019 3:27 pm
livesoft wrote:
Wed Jan 09, 2019 1:43 pm
We were not Roth eligible until a few years ago, so Roths are under between 5% and 10% of total assets.
EVERYONE is eligible to convert.
Yes, nowadays they are. There used to be income limits on that, right?

Anyways, the only reason we have so much in Roth IRAs is because we've been doing conversions.
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Re: BHers, what is your Roth IRA %?

Post by Leif » Wed Jan 09, 2019 3:55 pm

celia wrote:
Wed Jan 09, 2019 3:41 pm
Leif wrote:
Wed Jan 09, 2019 2:00 pm
I have about 20% of my IRA money in tax exempt.
That placement is unnecessary since the money is not taxed while it is in the IRA. When it is withdrawn, it is taxed as ordinary income, not tax-exempt.

I suggest putting the tax-exempt funds in your taxable account instead, where the tax-exempt status of the fund will be useful.
I'm not sure what you are saying. Would you prefer if I worded it "I have 20% of my IRA money in a Roth IRA"? Same thing. After all, that was the OPs question.

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celia
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Re: BHers, what is your Roth IRA %?

Post by celia » Wed Jan 09, 2019 3:56 pm

infotrader wrote:
Wed Jan 09, 2019 3:36 pm
Can you convert a position in traditional IRA directly to Roth on a market down day?
Yes, you can convert on a down day, up day, sideways day, any day the market is open. If you convert in-kind (meaning the asset was moved without selling and re-purchasing it), it is the value on the day of conversion that is taxed. WHAT the holding is, is irrelevant. But it makes the most sense to convert stock funds first, instead of bond funds, since you want the stocks' future growth to happen in the Roth (where the growth will be tax-free) instead of staying in the traditional IRA and bringing the account value back to where it was before you converted. :oops:

livesoft wrote:There used to be income limits on that, right?
I'm not sure. That would have been before I was interested in converting, if it used to be. Obviously you couldn't convert to Roth before Roths even existed.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.

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Re: BHers, what is your Roth IRA %?

Post by LiterallyIronic » Wed Jan 09, 2019 3:57 pm

Just rolled over my old company's 401k to a Traditional IRA, so that makes us about 80% Roth IRA, 19% Traditional IRA, 1% 401k.

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Re: BHers, what is your Roth IRA %?

Post by triceratop » Wed Jan 09, 2019 3:58 pm

Leif wrote:
Wed Jan 09, 2019 3:55 pm
celia wrote:
Wed Jan 09, 2019 3:41 pm
Leif wrote:
Wed Jan 09, 2019 2:00 pm
I have about 20% of my IRA money in tax exempt.
That placement is unnecessary since the money is not taxed while it is in the IRA. When it is withdrawn, it is taxed as ordinary income, not tax-exempt.

I suggest putting the tax-exempt funds in your taxable account instead, where the tax-exempt status of the fund will be useful.
I'm not sure what you are saying. Would you prefer if I worded it "I have 20% of my IRA money in a Roth IRA"? Same thing. After all, that was the OPs question.
This is a miscommunication. celia took your phrasing of "tax exempt" which you meant to be the Roth portion of your IRA to instead be tax-exempt bonds, which should not be placed in any kind of tax-advantaged wrapper, Roth or otherwise.
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Re: BHers, what is your Roth IRA %?

Post by 123 » Wed Jan 09, 2019 3:59 pm

I have only 10% of IRA money in Roth. I haven't done any conversions. My employers haven't had Roth 401K options. I got such an early start on the Traditional IRA and regular 401K side of things that the momentum on those investments seems to be unstopable. I guess it's not too bad a problem to have.
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Re: BHers, what is your Roth IRA %?

Post by RickBoglehead » Wed Jan 09, 2019 4:02 pm

Darth Xanadu wrote:
Wed Jan 09, 2019 1:58 pm
RickBoglehead wrote:
Wed Jan 09, 2019 1:32 pm

Of the retirement funds, 88% are ROTH. We expect to have all the non-ROTH converted to ROTH within the first few years of retirement.
Presumably, you'd want at least SOME taxable income every year, to at least take advantage of deductions.
As I indicated in my post, 66% of our portfolio is taxable (non-retirement). Our 88% ROTH is of the other 34% of our portfolio that is retirement assets. By the time we collect Social Security at 70, I expect to have zero RMD requirements.
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celia
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Re: BHers, what is your Roth IRA %?

Post by celia » Wed Jan 09, 2019 4:05 pm

Leif wrote:
Wed Jan 09, 2019 3:55 pm
celia wrote:
Wed Jan 09, 2019 3:41 pm
Leif wrote:
Wed Jan 09, 2019 2:00 pm
I have about 20% of my IRA money in tax exempt.
That placement is unnecessary since the money is not taxed while it is in the IRA. When it is withdrawn, it is taxed as ordinary income, not tax-exempt.

I suggest putting the tax-exempt funds in your taxable account instead, where the tax-exempt status of the fund will be useful.
I'm not sure what you are saying. Would you prefer if I worded it "I have 20% of my IRA money in a Roth IRA"? Same thing. After all, that was the OPs question.
The original quote sounds like you said:
20% of my tax-deferred account [traditional IRA] is in a tax-exempt money market fund.
When you originally wrote "tax exempt", did you possibly mean "tax-deferred"?

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Re: BHers, what is your Roth IRA %?

Post by livesoft » Wed Jan 09, 2019 4:07 pm

celia wrote:
Wed Jan 09, 2019 3:56 pm
livesoft wrote:There used to be income limits on that, right?
I'm not sure. That would have been before I was interested in converting, if it used to be. Obviously you couldn't convert to Roth before Roths even existed.
I looked it up and found this in wikipedia:
Prior to 2010, two circumstances prohibited conversions: Modified Adjusted Gross Income exceeding $100,000 or the participant's tax filing status is Married Filing Separately. These limitations were removed as part of the Tax Increase Prevention and Reconciliation Act of 2005.
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hawkfan55
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Re: BHers, what is your Roth IRA %?

Post by hawkfan55 » Wed Jan 09, 2019 4:11 pm

Ages 63 and 60. Both Retired within last couple years. 64.5% Deferred, 35% Roth. .5% in taxable
We are doing Roth Conversions over the next 5-6 years before starting Social Security and using withdrawals from deferred accounts for expenses and paying taxes on the Roth Conversions.

Other than maxing out our 401k/403b deferred accounts, we also maxed our Roth accounts since they became available in 1998. Any additional savings were used to maintain an emergency fund and contribute to 529s for our kid's college education. Since retired, we withdraw monthly from Vanguard and really hold very little in taxable savings.
Last edited by hawkfan55 on Wed Jan 09, 2019 4:22 pm, edited 1 time in total.
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Re: BHers, what is your Roth IRA %?

Post by John Z » Wed Jan 09, 2019 4:18 pm

Retired 7 years and taking RMDs for 2 years. Roth 19%, IRA 74%, taxable 7%

hawkfan55
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Re: BHers, what is your Roth IRA %?

Post by hawkfan55 » Wed Jan 09, 2019 4:20 pm

In 1998, the first year Roth IRAs were made available, the maximum contribution was $2000 and there was not a catch-up provision for those 50 or older.
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randomguy
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Re: BHers, what is your Roth IRA %?

Post by randomguy » Wed Jan 09, 2019 4:37 pm

Glockenspiel wrote:
Wed Jan 09, 2019 1:24 pm
Current Roth IRA % is 38.2%. We also have an additional 6.0% of our portfolio in a tax-free HSA account. Wife and I are both early-mid 30s, but I would like to think somewhere between 25-75% of portfolio in tax deferred accounts is ideal.
You don't try and optimize for ROTH versus traditional balance. Your goal is to maximize your spendable money not to hit some ratio. The number you get is driven by other factors. If your working and your income tax rate is 0%, contributing to a traditional makes little sense. If your paying close to 50% today and expect to be 32% in retirement (leaving NYC an moving to FL and living off 300k instead of 1 million) contributing to a ROTH makes little sense.

There are far too many unknowns to solve exactly. Converting half the money over the next 10 years would be my guess (note zero information on spending, desire use for the money, lTC insurance,.....).

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TomatoTomahto
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Re: BHers, what is your Roth IRA %?

Post by TomatoTomahto » Wed Jan 09, 2019 4:39 pm

Hmmm, interesting question. My first response was "my Roth IRA% is too low." I went to Quicken to get more accurate numbers.

Roth is 3% (low; we had one year of post tax years ago that we mega backdoored later, and now annual backdoor for wife only).
401k is 27%
IRA is 7%
Taxable is 63%.
Okay, I get it; I won't be political or controversial. The Earth is flat.

randomguy
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Re: BHers, what is your Roth IRA %?

Post by randomguy » Wed Jan 09, 2019 4:41 pm

latesaver wrote:
Wed Jan 09, 2019 3:51 pm
celia wrote:
Wed Jan 09, 2019 3:27 pm
livesoft wrote:
Wed Jan 09, 2019 1:43 pm
We were not Roth eligible until a few years ago, so Roths are under between 5% and 10% of total assets.
EVERYONE is eligible to convert.

I started converting like crazy while we were working during the 2008 market drop when I saw the share prices drop significantly. To me, that meant "Roth conversion taxes" were on sale, since you'd only have to pay half the conversion taxes when the share price was half its usual price! We finished converting all our traditional IRAs in early retirement and drew down most of our Inherited IRAs before starting SS.

We didn't have as much in traditional IRAs as others here because we put contributions into Roths primarily once they became available. I saw it as paying $x in taxes for the year of the contribution vs. a multiple of that at withdrawal in the future (after the account grew). The dollar amount of taxes was more significant to me than the tax rate since we paid the taxes out of extra income we didn't need for living expenses. (We also used some of the tax-deferred accounts to buy extra years of service credit to increase our pensions which will be taxed at a more uniform payout than RMDs would have been.)
i would never have thought about that strategy (converting when the market crashes). maybe it's something that is more apparent in the midst of that type of situation.
Note you pay a lot less taxes but you don't save a ton of money
a) 100k -50% market drop -12.5k for taxes *2 for market rise = 75k
b) 100k-50% market drop *2 for market rise -25k for taxes = 75k
If you are using outside money the taxes (to pay taxes now or later) factors in a bit a long with tax drag. Now if you start crossing tax brackets all bets are off:)

RetiredCSProf
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Re: BHers, what is your Roth IRA %?

Post by RetiredCSProf » Wed Jan 09, 2019 4:42 pm

Is there an ideal ratio of Roth IRA to tax-deferred IRA? I have been wondering how to arrive at an ideal ratio, if it exists.

I retired at age 64 with nothing in Roth. At that time, I consulted with a financial advisor who dodged my questions on Roth conversion and recommended a QLAC, which I declined. Over the past several years, I have completed Roth conversions up to the next Medicare IRMAA bracket and / or income tax bracket.

I am 70 and started taking RMDs in 2018. Not counting taxable, my portfolio is 31% Roth IRA and 69% tax-deferred rollover IRAs. I plan to continue making small Roth conversions over the next couple years.

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LadyGeek
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Re: BHers, what is your Roth IRA %?

Post by LadyGeek » Wed Jan 09, 2019 5:08 pm

This thread is now in the Investing - Theory, News & General forum (general question).

I don't worry about my Roth IRA percentage (as part of the entire portfolio). You can't plan your future expenses - life has a way of changing your plans.

Instead, I simply contribute the maximum I can, along with an annual After-tax 401(k) rollover.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

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Leif
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Re: BHers, what is your Roth IRA %?

Post by Leif » Wed Jan 09, 2019 5:21 pm

celia wrote:
Wed Jan 09, 2019 4:05 pm
20% of my tax-deferred account [traditional IRA] is in a tax-exempt money market fund.
When you originally wrote "tax exempt", did you possibly mean "tax-deferred"?
I don't know where the quote came from. Not from me. That would be incredibly stupid to put a tax-exempt money market fund in a tax deferred account. In my portfolio spreadsheet I divide my accounts into:

Taxable
Tax Deferred (tax to be paid on withdrawal)
Tax Exempt (never taxed, i.e. Roth IRA)

Sorry for your misunderstanding.

carolinaman
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Re: BHers, what is your Roth IRA %?

Post by carolinaman » Wed Jan 09, 2019 5:32 pm

11% and increasing about 2% a year through TIRA to Rothe conversions. I am limited in what I can convert due to MAGI triggering Medicare Part B premiums.

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infotrader
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Re: BHers, what is your Roth IRA %?

Post by infotrader » Wed Jan 09, 2019 5:33 pm

infotrader wrote:
Wed Jan 09, 2019 1:17 pm
We have been trying to boost the % of our Roth IRA balance.
DW and I (61 and 58) plan to retire in two years, and have over 600k in Roth, and about 2.4 m in tax deferred accounts.
Our plan is to convert as much as possible. My question is: is there an ideal % for the tax deferred balance when RMD starts in 10 years?
P.S. we don't plan to use the money for retirement, since we have pensions, etc. to cover our living costs and taxes.
The History of the IRA Contribution Limit and Non-Working Spouse Contribution
Year Contribution Limit Catch-up 50+ Year Old Non-Working Spouse Contribution
2018 $5,500.00 $1,000.00 $5,500.00
2017 $5,500.00 $1,000.00 $5,500.00
2016 $5,500.00 $1,000.00 $5,500.00
2015 $5,500.00 $1,000.00 $5,500.00
2014 $5,500.00 $1,000.00 $5,500.00
2013 $5,500.00 $1,000.00 $5,500.00
2012 $5,000.00 $1,000.00 $5,000.00
2011 $5,000.00 $1,000.00 $5,000.00
2010 $5,000.00 $1,000.00 $5,000.00
2009 $5,000.00 $1,000.00 $5,000.00
2008 $5,000.00 $1,000.00 $5,000.00
2007 $4,000.00 $1,000.00 $4,000.00
2006 $4,000.00 $1,000.00 $4,000.00
2005 $4,000.00 $500.00 $4,000.00
2004 $3,000.00 $500.00 $3,000.00
2003 $3,000.00 $500.00 $3,000.00
2002 $3,000.00 $500.00 $3,000.00
2001 $2,000.00 $2,000.00
2000 $2,000.00 $2,000.00
1999 $2,000.00 $2,000.00
1998 $2,000.00 $2,000.00
1997 $2,000.00 $250.00
1996 $2,000.00 $250.00
1995 $2,000.00 $250.00
1994 $2,000.00 $250.00
1993 $2,000.00 $250.00
1992 $2,000.00 $250.00
1991 $2,000.00 $250.00
1990 $2,000.00 $250.00
1989 $2,000.00 $250.00
1988 $2,000.00 $250.00
1987 $2,000.00 $250.00
1986 $2,000.00 $250.00
1985 $2,000.00 $250.00
1984 $2,000.00 $250.00
1983 $2,000.00 $250.00
1982 $2,000.00 $250.00
1981 $1,500.00 $250.00
1980 $1,500.00 $250.00
1979 $1,500.00 $250.00
1978 $1,500.00 $250.00
1977 $1,500.00 $250.00
1976 $1,500.00
1975 $1,500.00
1974 $1,500.00

Pigeye Brewster
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Re: BHers, what is your Roth IRA %?

Post by Pigeye Brewster » Wed Jan 09, 2019 5:51 pm

Roth IRA, Roth 401(k) & HSA = 16%
Traditional IRA, 401(k), 403(b), etc. = 76%
Taxable = 8%

Pigeye Brewster
Posts: 366
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Re: BHers, what is your Roth IRA %?

Post by Pigeye Brewster » Wed Jan 09, 2019 5:55 pm

livesoft wrote:
Wed Jan 09, 2019 4:07 pm
celia wrote:
Wed Jan 09, 2019 3:56 pm
livesoft wrote:There used to be income limits on that, right?
I'm not sure. That would have been before I was interested in converting, if it used to be. Obviously you couldn't convert to Roth before Roths even existed.
I looked it up and found this in wikipedia:
Prior to 2010, two circumstances prohibited conversions: Modified Adjusted Gross Income exceeding $100,000 or the participant's tax filing status is Married Filing Separately. These limitations were removed as part of the Tax Increase Prevention and Reconciliation Act of 2005.
That is correct. And when the $100k income limit was removed in 2010, taxpayers were given a one-time option to spread the conversion taxes over 2 tax years.

SGM
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Re: BHers, what is your Roth IRA %?

Post by SGM » Wed Jan 09, 2019 5:58 pm

I began converting when the income limits changed in 2010. After 6 years I was all Roth no tax deferred. Taxes paid out of a taxable account. Will reap the real benefits of the conversion when I turn 70 1/2.

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