Should we abandon the Roth IRA (for now)?

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withrye
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Should we abandon the Roth IRA (for now)?

Post by withrye » Wed Dec 05, 2018 10:26 am

I've been spending the early days of December assessing our finances and thinking about any necessary adjustments to retirement savings in 2019.

My spouse and I live in California, and I am a resident physician at a UC hospital. We contribute our mandatory 7.5% and 10.2% to our respective employer retirement accounts (UC DCP and CalSTRS, respectively). On top of that, our strategy has been to maximize the UC 457 ($18.5k this year, planned $19k in 2019) as well as maximize our Roth IRAs (combined $11k this year, planned $12k in 2019). This savings approach brings us solidly in the 22% federal tax bracket and 9.3% state tax bracket.

Our rationale for contributing to the Roth IRA in prior years was twofold:
1) we're currently in the income range to contribute in a straightforward way, but will not be in a few years due to an increase in income after residency, and
2) uncertainty regarding the IRS and Congress' opinion on the backdoor Roth, and the potential that it wouldn't be available in the medium-long term.

Given some comments made earlier this year by a Congress conference committee that appear to "bless" the backdoor Roth, I feel more confident (rightly or wrongly) that contributions to a Roth IRA will be available in a few years, even once our income is above the limit for straightforward contributions.

Given the above, does it make sense to switch our savings plan to entirely pre-tax savings (i.e. add the equivalent of $12k post-tax into a 403b at a 31.3% marginal rate), and only go back to Roth IRA contributions in the future once all pre-tax accounts can be maxed (due to increases in income)?

As always, thank you for your input. Please let me know if any additional context or clarification is needed.

stan1
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Re: Should we abandon the Roth IRA (for now)?

Post by stan1 » Wed Dec 05, 2018 10:45 am

There's no right or wrong answer because you would need to be able to predict the future to know the optimal decision, but if you are a physician in the 22% federal tax bracket right now you'll probably be in a higher bracket in the future. You may or may not make a career in a UC hospital. I'd give a slight preference to the Roth IRA contributions (direct and back door) right now because the deductibility of the Traditional contributions in the future will be more important as your tax rates increase, especially if you are staying in California. You could also rationally argue that the sure thing of the current tax deduction is more valuable than speculating about what might be in 30 or 50 years. You are likely to end up with large Traditional retirement and Taxable accounts with much smaller Roth retirement accounts. Any choice is good enough.

baseball2horse
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Re: Should we abandon the Roth IRA (for now)?

Post by baseball2horse » Wed Dec 05, 2018 10:47 am

If you anticipate being in a higher tax bracket later in your career, and it sounds like do, it would make sense to continue to fund the Roth now, while you are being the least amount of tax on that money.

Razorbacks92
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Re: Should we abandon the Roth IRA (for now)?

Post by Razorbacks92 » Wed Dec 05, 2018 11:02 am

The Roth is still the way to go, in my opinion. The rational to continue with the Roth is, tax-brackets are most likely only going to increase over the foreseeable future -- this is not political, just common sense assumption. I'm not sure the age of you and your spouse, but I'm assuming younger and income will grow. Yeah, it's nice to get that deduction today, but choosing to put money into an IRA and convert later will be less beneficial.

The power of the Roth comes through compounding, so the longer you wait to make the conversion the less beneficial the Roth becomes. You can test this by running a few scenarios of contributing to the IRA now and converting later vs. contributing to the Roth now -- There are all kinds of calculators on the internet that can help with this.

One more point. As a physician your lifestyle will probably either stay the same or increase at retirement. If you have to much of your net worth tied up in Tax-Deferred assets it will create a tax time bomb that I don't think most people truly understand until it's to late. Just another reason why building Roth accounts now, when you know tax-rates are low, makes sense. Hope this helps.

KlangFool
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Re: Should we abandon the Roth IRA (for now)?

Post by KlangFool » Wed Dec 05, 2018 11:08 am

OP,

In addition to all that had been posted, you could use Roth IRA to store your emergency fund.

https://www.bogleheads.org/wiki/Roth_IR ... gency_fund

KlangFool

withrye
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Re: Should we abandon the Roth IRA (for now)?

Post by withrye » Wed Dec 05, 2018 12:13 pm

Thank you all for your prompt input. I try not to make assumptions on future tax rates, which is probably just a cop out for not wanting to be explicit about my assumptions.

My vague approach to tax rates are to assume my spending in retirement will be in the bracket of my current income as a resident. I could be naive, but I cannot imagine needing to spend an annual >$165k (the top of my current bracket) if mortgage, kids' education, etc are taken care of. We currently spend less than half that amount on the two of us and life is already quite good. On top of that, I further assume that this bracket (inflation adjusted) will be within a few percentage points of its current level. I know I can't predict the direction of a more significant movement, so I don't even pretend to know. Furthermore, I assume that a reasonable mix of pre-tax, post-tax, and taxable savings offers flexibility to take advantage of whatever tax structures and incentives exist at the time of retirement (i.e. something along the lines of the current paradigm of Roth IRA ladder, LTCG withdrawals at 15%, etc).

If we assume I'm currently in 22%, will jump to 32/35%, and will fall back to ~22% in retirement, I suppose it can be seen as a wash regarding Roth vs traditional right now. In the peak earning years (32/35%), as much pre-tax as possible makes sense, with backdoor Roth once it's filled.

Two potential twists:
1) If I plan to retire early (let's say 55), does that alter my preference for maximizing traditional contributions, assuming I will have a few years of Roth conversion ladder flexibility? I assume not, because I assume I will be making these conversions at the ~22% bracket given I will have normal spending requirements between ages 55-65.
2) If there's a chance I will retire in a state other than California, does that also shift my preference to maximizing traditional contributions, as it's unlikely I will be taxed more than 9.3% at the state level in retirement? I assume I should take the 9.3% tax savings now, for the potential of withdrawal at more favorable state level in the future (3-4%, or even 0% in WA, TX, etc).

To Klangfool: thanks for reiterating the option for a temporary emergency fund. I certainly took advantage of that structure a few years ago during medical school. We currently have a large enough portfolio that the bond portion (not actually held in Roth, but money is fungible) would cover an emergency. As such we keep a fairly small amount in taxable savings/checkings for any same-day emergencies, and would be able to tap the Roth for a more complete 3-6 month emergency period if necessary.

Thanks again everyone.

aristotelian
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Re: Should we abandon the Roth IRA (for now)?

Post by aristotelian » Wed Dec 05, 2018 12:21 pm

General rule of thumb is pretax employer plan as your primary vehicle, and Roth for diversification. I see no reason why your situation is especially unique.

For early retirement, you will have more flexibility to do Traditional-to-Roth conversions prior to Social Security kicking in.

I would argue that your tax rate in retirement is most likely a lot less than 22%. Even if your spending is moderate, you will have very little taxable income. See this thread for a possible scenario for zero tax: viewtopic.php?t=87471

That said, I would still consider Roth on the IRA side for diversification and simplicity.

JBTX
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Re: Should we abandon the Roth IRA (for now)?

Post by JBTX » Wed Dec 05, 2018 3:07 pm

withrye wrote:
Wed Dec 05, 2018 10:26 am
I've been spending the early days of December assessing our finances and thinking about any necessary adjustments to retirement savings in 2019.

My spouse and I live in California, and I am a resident physician at a UC hospital. We contribute our mandatory 7.5% and 10.2% to our respective employer retirement accounts (UC DCP and CalSTRS, respectively). On top of that, our strategy has been to maximize the UC 457 ($18.5k this year, planned $19k in 2019) as well as maximize our Roth IRAs (combined $11k this year, planned $12k in 2019). This savings approach brings us solidly in the 22% federal tax bracket and 9.3% state tax bracket.

Our rationale for contributing to the Roth IRA in prior years was twofold:
1) we're currently in the income range to contribute in a straightforward way, but will not be in a few years due to an increase in income after residency, and
2) uncertainty regarding the IRS and Congress' opinion on the backdoor Roth, and the potential that it wouldn't be available in the medium-long term.

Given some comments made earlier this year by a Congress conference committee that appear to "bless" the backdoor Roth, I feel more confident (rightly or wrongly) that contributions to a Roth IRA will be available in a few years, even once our income is above the limit for straightforward contributions.

Given the above, does it make sense to switch our savings plan to entirely pre-tax savings (i.e. add the equivalent of $12k post-tax into a 403b at a 31.3% marginal rate), and only go back to Roth IRA contributions in the future once all pre-tax accounts can be maxed (due to increases in income)?

As always, thank you for your input. Please let me know if any additional context or clarification is needed.
So are you saying now that you have limited funds, such that right now you can only choose between contribute to Roth or max out traditional employer plan? You don't have enough to do both, correct?

My gut reaction is at 31%, right now, if you have to choose, I'd probably choose to max traditional. Obviously if you have funds to do both, then by all means do both.

Once your tax bracket increases, presumably you will have more money to invest and will not be liquidity constrained, and at that point you might be able to do both. If you can do both in the future, you should do both. While traditional will be better than Roth if your future tax rate is 40+%, once you have maxed out traditional, a Roth will always be better than after tax investments.

So I guess I'm really not understanding why you are setting up a choice between doing Roth now or doing it later. When you have more income, presumably you will max out both, regardless, unless you are thinking you will still be liquidity constrained even at higher incomes.

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Watty
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Re: Should we abandon the Roth IRA (for now)?

Post by Watty » Wed Dec 05, 2018 3:34 pm

A couple of things to consider;

1) Your plans to retire in a high tax bracket might not happen if you run into some setback in your life, health, or career. Once you get in your 50s and any kids are out on their own and your house is paid off you may also decide that retiring in a lower tax bracket is OK so there is no need to work another five or ten years.

2) Even without the back door Roth you may be able to do a lot of Roth conversions in the 22% tax bracket after you retire. An over 65 couple can have almost $200K in taxable income and still be in the 22% federal tax bracket.

4) You might retire in a state with lower or no state income taxes.

5) The next higher federal tax bracket is 24% which is only 2% higher than the 22%. If you do get into that in retirement it is not really a big deal.

Being in a combined federal and state 31% tax bracket, to me it would take a compelling reason to choose a Roth over a deductible retirement account. I don't see one. I would max out the deductible accounts first.

retiredjg
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Re: Should we abandon the Roth IRA (for now)?

Post by retiredjg » Wed Dec 05, 2018 3:40 pm

I don't think my answer will be a popular one, but I'm one of the people who believe you can save too much in tax-deferred accounts. I think that filling 2 of them is enough for most couples. I have no basis for that "2". It is a gut feeling. And it might not even apply to you since you may have a shorter time period to save (got started saving late because of school and possibly student debt).

Since you mention 2 mandatory contributions, it seems you will also have pensions. Is that correct? A couple of pensions would argue for NOT filling 3 tax-deferred accounts every year for many years. And a couple of pensions would argue for putting more into Roth accounts than people without pension(s).

The potential problem is this. If you end up with a very large tax-deferred account, when RMDs start, you might run into an increase in tax rates when you are in your 70's. For some, this can be a significant increase, especially if SS is delayed until the same time. And the problem compounds when one dies because the survivor is frequently pushed into an even higher tax bracket.

One way to avoid this is to retire early and spend 10 or 15 years doing Roth conversions on that large account. The problem is that pensions make the amount you can convert at a low tax rate much smaller than if you didn't have pension(s).

I've only scratched the surface of this issue, but suffice it to say that some people have reported wishing they had never saved as much as they did in tax deferred accounts because it came back to bite them in the end.

I'm not arguing against using tax-deferral. I think it is a great tool. I also think one can use too much of it. Not everyone agrees.

Ben Mathew
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Re: Should we abandon the Roth IRA (for now)?

Post by Ben Mathew » Wed Dec 05, 2018 4:14 pm

withrye wrote:
Wed Dec 05, 2018 10:26 am
Given the above, does it make sense to switch our savings plan to entirely pre-tax savings (i.e. add the equivalent of $12k post-tax into a 403b at a 31.3% marginal rate), and only go back to Roth IRA contributions in the future once all pre-tax accounts can be maxed (due to increases in income)?
The equivalent of $12k in Roth would be more than $12k in the traditional accounts because of the future tax at withdrawal. For example, if you expect to withdraw from the traditional at a 30% marginal tax at retirement, you should contribute $12,000/(1-.3)=$17,143.

The traditional vs Roth question is not entirely clear in your case, but two scenarios where the Roth will likely be better:

- If you think you'll be doing a backdoor Roth at a higher marginal tax rate in your peak earning years, doing the Roth now instead is clearly better.

- If you plan on leaving an inheritance, the Roth could be better because you're not forced to take RMDs. i.e. You can live on RMDs from the traditional accounts, and leave the Roth for the heirs.

withrye
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Re: Should we abandon the Roth IRA (for now)?

Post by withrye » Wed Dec 05, 2018 4:16 pm

JBTX wrote:
Wed Dec 05, 2018 3:07 pm
So are you saying now that you have limited funds, such that right now you can only choose between contribute to Roth or max out traditional employer plan? You don't have enough to do both, correct?

My gut reaction is at 31%, right now, if you have to choose, I'd probably choose to max traditional. Obviously if you have funds to do both, then by all means do both.

Once your tax bracket increases, presumably you will have more money to invest and will not be liquidity constrained, and at that point you might be able to do both. If you can do both in the future, you should do both. While traditional will be better than Roth if your future tax rate is 40+%, once you have maxed out traditional, a Roth will always be better than after tax investments.

So I guess I'm really not understanding why you are setting up a choice between doing Roth now or doing it later. When you have more income, presumably you will max out both, regardless, unless you are thinking you will still be liquidity constrained even at higher incomes.
You've hit the nail on the head. My question boils down to "if I am facing 31% marginal tax, should I invest X+17.4k into pre tax savings (which comes out to Y+12k post-tax), or X into pre-tax and 12k into a Roth IRA"? This is keeping in mind that I am not writing off Roth IRA contributions for good, just for the next two years. Then it will go back to the typical answer of "max all tax-advantaged space, then contribute to taxable."
retiredjg wrote:
Wed Dec 05, 2018 3:40 pm
Since you mention 2 mandatory contributions, it seems you will also have pensions. Is that correct? A couple of pensions would argue for NOT filling 3 tax-deferred accounts every year for many years. And a couple of pensions would argue for putting more into Roth accounts than people without pension(s).
I agree that pensions can dramatically complicate the use of tax-advantaged accounts. (Un?)fortunately, one set of contributions is mandatory but in lieu of SS, and does not contribute to a defined benefit plan. It is the UC DCP and is basically mine to take home as a pre-tax fund once I leave UC. The other is a pension plan, but will likely be withdrawn well before the contributor qualifies for the pension (i.e. we don't plan on staying with this employer for the long long term). If we're fortunate enough to have a wealth of pre-tax space in future employment (403b+457 etc) we'll definitely keep an eye on the overall ratio of our contributions to make sure we're not hit with a huge unconvertible RMD bomb in a few decades.

The first string of comments had me leaning toward continuing Roth contributions for simplicity and diversity purposes. Now I'm leaning back toward avoiding the Roth for the next few years while I put the equivalent of 12k post-tax (~17.4k pre-tax) into the wide-open 403b.

retiredjg
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Re: Should we abandon the Roth IRA (for now)?

Post by retiredjg » Wed Dec 05, 2018 4:21 pm

If you are a resident, chances are your income will be higher at a later date. I'd use these "lower" income years more for Roth if you can't do all of it.

withrye
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Re: Should we abandon the Roth IRA (for now)?

Post by withrye » Wed Dec 05, 2018 4:23 pm

Ben Mathew wrote:
Wed Dec 05, 2018 4:14 pm
The equivalent of $12k in Roth would be more than $12k in the traditional accounts because of the future tax at withdrawal. For example, if you expect to withdraw from the traditional at a 30% marginal tax at retirement, you should contribute $12,000/(1-.3)=$17,143.

The traditional vs Roth question is not entirely clear in your case, but two scenarios where the Roth will likely be better:

- If you think you'll be doing a backdoor Roth at a higher marginal tax rate in your peak earning years, doing the Roth now instead is clearly better.
Absolutely agree on the math. My convoluted phrasing was an attempt to get around doing the math at the time of writing. I'd aim to deposit ~$17k in a pre-tax account to create the same net effect on take-home dollars as contributing $12k to the Roth.

My choice is essentially trad now followed by trad+backdoor Roth later OR Roth now followed by trad+backdoor Roth later. In both circumstances I will be doing backdoor Roth contributions for as long as they're available.

withrye
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Re: Should we abandon the Roth IRA (for now)?

Post by withrye » Wed Dec 05, 2018 4:27 pm

retiredjg wrote:
Wed Dec 05, 2018 4:21 pm
If you are a resident, chances are your income will be higher at a later date. I'd use these "lower" income years more for Roth if you can't do all of it.
Does this apply even if "lower" income years are at a 31.3% marginal tax rate? If all tax brackets remain the same (hah!) I plan to retire in this same bracket, making it a wash. Realistically though, without a pension and with early retirement, I may be able to take my current pre-tax contributions and convert them at a rate significantly lower than 31.3%. Wouldn't that argue for stuffing more into the pre-tax buckets, as I preserve some future optionality and it's unlikely that in retirement I get hit with a >31.3% marginal rate (barring an across-the-board hike on all tax brackets, which is possible but not worth trying to prognosticate)?

JBTX
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Re: Should we abandon the Roth IRA (for now)?

Post by JBTX » Wed Dec 05, 2018 4:31 pm

withrye wrote:
Wed Dec 05, 2018 4:16 pm
JBTX wrote:
Wed Dec 05, 2018 3:07 pm
So are you saying now that you have limited funds, such that right now you can only choose between contribute to Roth or max out traditional employer plan? You don't have enough to do both, correct?

My gut reaction is at 31%, right now, if you have to choose, I'd probably choose to max traditional. Obviously if you have funds to do both, then by all means do both.

Once your tax bracket increases, presumably you will have more money to invest and will not be liquidity constrained, and at that point you might be able to do both. If you can do both in the future, you should do both. While traditional will be better than Roth if your future tax rate is 40+%, once you have maxed out traditional, a Roth will always be better than after tax investments.

So I guess I'm really not understanding why you are setting up a choice between doing Roth now or doing it later. When you have more income, presumably you will max out both, regardless, unless you are thinking you will still be liquidity constrained even at higher incomes.
You've hit the nail on the head. My question boils down to "if I am facing 31% marginal tax, should I invest X+17.4k into pre tax savings (which comes out to Y+12k post-tax), or X into pre-tax and 12k into a Roth IRA"? This is keeping in mind that I am not writing off Roth IRA contributions for good, just for the next two years. Then it will go back to the typical answer of "max all tax-advantaged space, then contribute to taxable."

withrye wrote:
Wed Dec 05, 2018 4:23 pm


My choice is essentially trad now followed by trad+backdoor Roth later OR Roth now followed by trad+backdoor Roth later. In both circumstances I will be doing backdoor Roth contributions for as long as they're available.
So it sounds like what you invest in a few years down the road really has nothing to do with your current decision now. Whether you put money in a Roth now, you will likely contribute to a backdoor Roth in the future, as I understand it.

So it gets down to max out traditional now or do a Roth now at a 31% marginal rate. I am generally a fan of Roths and think diversification of tax advantaged vehicles is a good thing, and also tend to think the potential for a zero percent marginal rate in retirement by going all/mostly traditional is overhyped. If you were in the 22% bracket, with no state income tax, I'd say opting for the Roth in your situation would be a rational thing to do, especially if the alternative pre tax savings goes into an after tax account (which is often the case in scenarios here). However, in your scenario, you are at 31%, and the pre tax savings goes into more pretax. Given that, I'd probably opt for maxing out the pretax.

Ben Mathew
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Re: Should we abandon the Roth IRA (for now)?

Post by Ben Mathew » Wed Dec 05, 2018 6:37 pm

withrye wrote:
Wed Dec 05, 2018 4:23 pm
My choice is essentially trad now followed by trad+backdoor Roth later OR Roth now followed by trad+backdoor Roth later. In both circumstances I will be doing backdoor Roth contributions for as long as they're available.
In that case, it's really hard to say which one will come out ahead. I'd lean towards traditional because your current bracket is not that low anyway, and having more money in traditional will give you the option of converting it to Roth at low tax rates later if you take early retirement. It looks like you have a really good handle on the issues, though. I don't think either option will be bad.

A third option, of course, is to max out both traditional and Roth now while funding your consumption through zero percent credit card offers! :happy
That was a joke (kind of).

MotoTrojan
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Re: Should we abandon the Roth IRA (for now)?

Post by MotoTrojan » Wed Dec 05, 2018 6:46 pm

baseball2horse wrote:
Wed Dec 05, 2018 10:47 am
If you anticipate being in a higher tax bracket later in your career, and it sounds like do, it would make sense to continue to fund the Roth now, while you are being the least amount of tax on that money.
My thinking too.

retiredjg
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Re: Should we abandon the Roth IRA (for now)?

Post by retiredjg » Sat Dec 08, 2018 9:29 am

withrye wrote:
Wed Dec 05, 2018 4:27 pm
retiredjg wrote:
Wed Dec 05, 2018 4:21 pm
If you are a resident, chances are your income will be higher at a later date. I'd use these "lower" income years more for Roth if you can't do all of it.
Does this apply even if "lower" income years are at a 31.3% marginal tax rate? If all tax brackets remain the same (hah!) I plan to retire in this same bracket, making it a wash. Realistically though, without a pension and with early retirement, I may be able to take my current pre-tax contributions and convert them at a rate significantly lower than 31.3%. Wouldn't that argue for stuffing more into the pre-tax buckets, as I preserve some future optionality and it's unlikely that in retirement I get hit with a >31.3% marginal rate (barring an across-the-board hike on all tax brackets, which is possible but not worth trying to prognosticate)?
This is a hard one and there is no certainty.

Let's say you have no savings to mention at this point and your bracket will be going up in the next few years to 35% Federal + state and it will stay there for 20 years. If you put a few years into Roth now, it will be the lowest rate you get anything into Roth while working.

In that situation, I'd use the two Roth IRAs now and put the leftovers into tax-deferral. As your rate goes up, you'll probably be able to fill all the accounts so no decision between the two will be necessary.

This method of using more Roth now would be particularly beneficial if you actually do retire in a rate similar to now (which is less likely than you think). Tax rate now vs same tax rate later is a wash. The main benefit to using tax deferral now is to defer at a high rate and pay later at a lower rate.

But even if your rate is lower in retirement, I'd consider using more Roth now for this reason. If you retire with a sizable tax-deferred account (highly likely), no matter what your tax rate in retirement, you may have difficulty getting it converted to Roth at something lower than your current 31.3%. Or if you do, you'll pay some other price such as increased Medicare premiums because you've crossed a few IRMAA tiers.


On the other side of the discussion, I'm sure there are situations where it could be beneficial to use more tax-deferred now and add on the Rothness later.

Suffice it to say, do the best guess you can, save some in both, and don't worry about the traditional vs Roth decision too much. The success of your retirement IS NOT going to depend on this decision. The success of your retirement will depend on saving enough money and spending what is reasonable for you when you do retire. Which account you put the money into many years back will probably turn out to be less important than you think it is right now.

letsgobobby
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Re: Should we abandon the Roth IRA (for now)?

Post by letsgobobby » Sat Dec 08, 2018 10:25 am

withrye wrote:
Wed Dec 05, 2018 10:26 am
I've been spending the early days of December assessing our finances and thinking about any necessary adjustments to retirement savings in 2019.

My spouse and I live in California, and I am a resident physician at a UC hospital. We contribute our mandatory 7.5% and 10.2% to our respective employer retirement accounts (UC DCP and CalSTRS, respectively). On top of that, our strategy has been to maximize the UC 457 ($18.5k this year, planned $19k in 2019) as well as maximize our Roth IRAs (combined $11k this year, planned $12k in 2019). This savings approach brings us solidly in the 22% federal tax bracket and 9.3% state tax bracket.

Our rationale for contributing to the Roth IRA in prior years was twofold:
1) we're currently in the income range to contribute in a straightforward way, but will not be in a few years due to an increase in income after residency, and
2) uncertainty regarding the IRS and Congress' opinion on the backdoor Roth, and the potential that it wouldn't be available in the medium-long term.

Given some comments made earlier this year by a Congress conference committee that appear to "bless" the backdoor Roth, I feel more confident (rightly or wrongly) that contributions to a Roth IRA will be available in a few years, even once our income is above the limit for straightforward contributions.

Given the above, does it make sense to switch our savings plan to entirely pre-tax savings (i.e. add the equivalent of $12k post-tax into a 403b at a 31.3% marginal rate), and only go back to Roth IRA contributions in the future once all pre-tax accounts can be maxed (due to increases in income)?

As always, thank you for your input. Please let me know if any additional context or clarification is needed.
I’d do Roth. It may be a wash from a tax bracket standpoint but it’s unlikely to be ‘wrong’, especially considering that in the future you will probably be saving in a predominantly pretax accounts. A little balance won’t hurt.

I was a UC resident a few (ok, quite a few) years back. I maxed my Roth first, although the limits were lower then. Nowadays my available annual savings are approximately $70k pretax, $18k Roth/HSA, the rest taxable. I think you’ll find yourself in a similar situation and even if you have a megabackdoor Roth available it will be unattractive because of your marginal rates. So I’d max the Roths now, while you can, and figure that that the tax bracket issue is likely to end up being a wash or slightly in your favor.

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