BHers, what is your Roth IRA %?

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
dharrythomas
Posts: 925
Joined: Tue Jun 19, 2007 4:46 pm

Re: BHers, what is your Roth IRA %?

Post by dharrythomas » Fri Jan 11, 2019 9:08 am

Basically, we’re at 30% Traditional, 30% Taxable, and 40% Roth. Now, I pull money from taxable each year for Roth IRA contributions and my IRA plus match is split 50/50 between Traditional and Roth. So taxable is declining and Roth will be growing faster. My contribution decisions are informed by an Army Reserve pension and a GS pension, both locked in and with SS should just about cover spending requirements.

Traditional will be for contributions and emergencies, Taxable dividends will add to spending, taxable and Roth balances for inheritance.

I’m not Boglehead average, but should be able to retire comfortablely with enough.

User avatar
midareff
Posts: 5954
Joined: Mon Nov 29, 2010 10:43 am
Location: Biscayne Bay, South Florida

Re: BHers, what is your Roth IRA %?

Post by midareff » Fri Jan 11, 2019 9:11 am

Roughly 7% ..... I was maxing my Deferred Comp IRA for many years and a little lean on excess taxable funds to contribute.

Small Law Survivor
Posts: 652
Joined: Tue Nov 17, 2015 5:36 pm

Re: BHers, what is your Roth IRA %?

Post by Small Law Survivor » Fri Jan 11, 2019 9:41 am

18% in Roth, plus another 2% in HSA. Wish it could be more. But, I plan to do enough conversions in the next couple of years (2019/2020), to bring the Roth percentage to over 20%. At that point social security and RMDs may limit additional conversions.
67 yrs, semi-retired lawyer, 50/40/10 s/b/c, 70/30 dom/int'l. Plan:4% until age 70, 3% when social security kicks in. Boglehead since day 1 under diff names

JW-Retired
Posts: 7034
Joined: Sun Dec 16, 2007 12:25 pm

Re: BHers, what is your Roth IRA %?

Post by JW-Retired » Fri Jan 11, 2019 9:50 am

RickBoglehead wrote:
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.
Rick,
It is hard for me to imagine how this works well but perhaps it does? Can you explain more? Down to zero tax deferred seems extreme.

What marginal tax are you paying for all the Roth conversions now, versus your effective marginal tax in your post 70 situation when collecting max SS? Do you have such a large taxable account that the SS tax is going to be fully phased in on the taxable portfolio dividends/interest/realized cap gains?

How does it work? :?:
JW
Retired at Last

User avatar
RickBoglehead
Posts: 2081
Joined: Wed Feb 14, 2018 9:10 am

Re: BHers, what is your Roth IRA %?

Post by RickBoglehead » Fri Jan 11, 2019 10:39 am

JW-Retired wrote:
Fri Jan 11, 2019 9:50 am
Rick,
It is hard for me to imagine how this works well but perhaps it does? Can you explain more? Down to zero tax deferred seems extreme.

What marginal tax are you paying for all the Roth conversions now, versus your effective marginal tax in your post 70 situation when collecting max SS? Do you have such a large taxable account that the SS tax is going to be fully phased in on the taxable portfolio dividends/interest/realized cap gains?

How does it work? :?:
JW
We hopped on the IRA bandwagon a very long time ago, and hopped on the ROTH IRA bandwagon when they first came out.

I had some years where our income was very low. In those years I did ROTH conversions. Not great for income (losing a job), but great for conversions. In some years we were in the bottom tier. Given when that was, the IRAs weren't large at that time. So I could convert a bunch, and then they grew via good investments. So it's not like I had a $1 million IRA and have been converting it. Each year when I did conversions, I sat down with TurboTax and played with the amount I was going to convert to see the income tax ramifications. As of matter of fact, for 2017 I ended up having to reverse part of my conversion (last year to do that) because I did too much.

Each year I do ROTH IRAs, maxed out, including the $1,000 50+.

Due to changing employers earlier in my career, my 401ks all got converted to IRAs, which then led me to do ROTH conversions on them. I also took advantage when they allowed you to spread out the tax on your conversions, had forgotten about that.

When we collect Social Security, my expectation is that between SS, pension, interest, dividends, and cap gains that we will end up in an equal or higher tax bracket than we are most years (2018 may be an exception). In fact, I may be changing my ROTH 2018 contributions to taxable, and changing my 2018 individual 401K contribution to taxable once I am confident that TurboTax is updated and I run the numbers. If it makes a big enough difference, I'll change them. In 2018, my taxable brokerage account peak (picked September, may not have found the exact peak date) was around 44% higher than my cost. I have years of built up gains including in Primecap. It's conceivable that I'll be selling investments with 75% - 100% gains by the time I need the funds.

I also follow the thought process that if invest $6,000 today, and pay the tax on that income, that this $6,000 will be 2 or 3 times that when I retire. Therefore, I'd rather pay tax on $6,000 today than pay tax on $6,000 or $12,000 in ten or more years. If tax rates are the same (doubtful), and I'm in the same tax bracket (uncertain), then you could argue that it's better to invest that tax money today and let it work for you then to pay tax today. All things being equal, I'll give up that potential growth on the tax owed today, and not have to pay taxes in retirement.

Lastly, I have the following beliefs, which may not be correct, but they're mine.

1) I believe that the government will never take away the ROTH benefit, i.e. that everything grows tax free and that all withdrawals are tax free. There would be a revolt. Not a political statement, but if this went away or was partially taxed, it would have to be for FUTURE contributions, i.e. we'd be grandfathered.

2) I also believe that as the years go on, the government is going to have to raise tax rates to pay the bills. Therefore, tax rates in ten years will be higher than they are today. Perhaps substantially higher.

It could be that I've been naive over the years and done conversions that weren't perfectly figured out as compared to those that have figured this out to the exact digit. Maybe I'll have big tax deductions in retirement and wish I had taxable income to offset them. That could be.

I'm ok with that.
Last edited by RickBoglehead on Fri Jan 11, 2019 11:10 am, edited 1 time in total.
Avid user of forums on a variety of interests - financial, home brewing, F-150, PHEV, home repair and more. Enjoy learning and passing on knowledge.

JBTX
Posts: 4582
Joined: Wed Jul 26, 2017 12:46 pm

Re: BHers, what is your Roth IRA %?

Post by JBTX » Fri Jan 11, 2019 10:54 am

We are low/mid 50's age. Apart from approximately 1.5 years of "liquid" funds (bank accts, money market, ibonds) and modest 529, all of our savings is in tax advantaged. Approx 40-45% Roth and 55-60% traditional. Twenty years ago I did some large Roth conversions from a 401k rollover when they for a brief period were allowing you to take conversion tax gains and spread it over several years. I think my marginal rate was in the mid-high 20's.

If we get the opportunity in a future low marginal rate to do conversions prior to social security, we will do additional conversions, although I am thinking our opportunities will be limited, as my wife will probably be working for a while longer, as she has a good small company job she really likes and it pays well.

User avatar
celia
Posts: 8873
Joined: Sun Mar 09, 2008 6:32 am
Location: SoCal

Re: BHers, what is your Roth IRA %?

Post by celia » Fri Jan 11, 2019 2:52 pm

stimulacra wrote:
Thu Jan 10, 2019 6:26 pm
I'm 41 years old. There's seldom been a year where the additional tax deduction for 401k/IRA would not have come in handy.

Roth IRA, Roth 401(k) & HSA = 5%
Traditional IRA, 401(k), 403(b), etc. = 90%
Taxable = 5%
Of course, if there's a way to lower your taxes, that sounds good. But are you aware that when you start RMDs and SS, your tax rate may be even higher than if you just paid the taxes now? In my opinion, it looks like you are pushing way too much into tax-deferred and the long term consequences have not been considered.

You are also not taking advantage of tax diversity. Everything in those withdrawals will be taxed at the rates in effect at that time, whereas we have some of the lowest tax rates right now (that will expire in 2026, unless renewed by Congress).

User avatar
StormShadow
Posts: 641
Joined: Thu Feb 09, 2012 6:20 pm

Re: BHers, what is your Roth IRA %?

Post by StormShadow » Fri Jan 11, 2019 3:00 pm

Not as high as I wish it could be.

User avatar
celia
Posts: 8873
Joined: Sun Mar 09, 2008 6:32 am
Location: SoCal

Re: BHers, what is your Roth IRA %?

Post by celia » Fri Jan 11, 2019 3:03 pm

JW-Retired wrote:
Fri Jan 11, 2019 9:50 am
RickBoglehead wrote:
Wed Jan 09, 2019 4:02 pm
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.
Rick,
It is hard for me to imagine how this works well but perhaps it does? Can you explain more? Down to zero tax deferred seems extreme.
I don't see it as extreme at all. It is the same as if retirement accounts had never existed, EXCEPT that the growth in Roth will never be taxed. This would be ideal for many people, especially for those who don't need withdrawals for living expenses. It also simplifies your portfolio since you/spouse don't even have to think about RMDs for the rest of your life, especially if cognitive decline sets in and you forget to take your RMDs.

For another way of looking at it, see my signature below and think of the spending power each dollar has:
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.

michaeljc70
Posts: 4371
Joined: Thu Oct 15, 2015 3:53 pm

Re: BHers, what is your Roth IRA %?

Post by michaeljc70 » Fri Jan 11, 2019 3:04 pm

celia wrote:
Fri Jan 11, 2019 2:52 pm
stimulacra wrote:
Thu Jan 10, 2019 6:26 pm
I'm 41 years old. There's seldom been a year where the additional tax deduction for 401k/IRA would not have come in handy.

Roth IRA, Roth 401(k) & HSA = 5%
Traditional IRA, 401(k), 403(b), etc. = 90%
Taxable = 5%
Of course, if there's a way to lower your taxes, that sounds good. But are you aware that when you start RMDs and SS, your tax rate may be even higher than if you just paid the taxes now? In my opinion, it looks like you are pushing way too much into tax-deferred and the long term consequences have not been considered.

You are also not taking advantage of tax diversity. Everything in those withdrawals will be taxed at the rates in effect at that time, whereas we have some of the lowest tax rates right now (that will expire in 2026, unless renewed by Congress).
It just depends. If you make a $150k/yr and live on 60k and want 60k for retirement, your income isn't going to be higher in retirement unless you worked too long/over saved for your goal.

Put another way, if you are saving for a certain income to roughly match your working income that will come from RMDs and SS, it is unlikely that that would ever be more than your working income. Now, some people save like crazy and work longer than needed and that puts you in a different situation.

stimulacra
Posts: 527
Joined: Wed Dec 21, 2016 3:50 pm
Location: Houston

Re: BHers, what is your Roth IRA %?

Post by stimulacra » Fri Jan 11, 2019 3:05 pm

celia wrote:
Fri Jan 11, 2019 2:52 pm
stimulacra wrote:
Thu Jan 10, 2019 6:26 pm
I'm 41 years old. There's seldom been a year where the additional tax deduction for 401k/IRA would not have come in handy.

Roth IRA, Roth 401(k) & HSA = 5%
Traditional IRA, 401(k), 403(b), etc. = 90%
Taxable = 5%
Of course, if there's a way to lower your taxes, that sounds good. But are you aware that when you start RMDs and SS, your tax rate may be even higher than if you just paid the taxes now? In my opinion, it looks like you are pushing way too much into tax-deferred and the long term consequences have not been considered.

You are also not taking advantage of tax diversity. Everything in those withdrawals will be taxed at the rates in effect at that time, whereas we have some of the lowest tax rates right now (that will expire in 2026, unless renewed by Congress).
It may be, the numbers I've run over the past few years suggests that it probably won't be. I'm open to new approaches though.

Maybe 2019 is the year I max out my Roth IRA :)

User avatar
celia
Posts: 8873
Joined: Sun Mar 09, 2008 6:32 am
Location: SoCal

Re: BHers, what is your Roth IRA %?

Post by celia » Fri Jan 11, 2019 3:18 pm

michaeljc70 wrote:
Fri Jan 11, 2019 3:04 pm
Put another way, if you are saving for a certain income to roughly match your working income that will come from RMDs and SS, it is unlikely that that would ever be more than your working income.
But your RMDs won't stay level, unless you have a low growth rate in the tax-deferred account. They start at 3.65% and increase each year while the tax-deferred account continues to grow until your mid-80s (on average). As long as the amount you withdraw each year is less than the growth in the account, the account will keep growing. Of course, there will be some "down" years, so maybe that will help keep a lid on the growth. :D
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.

User avatar
TomatoTomahto
Posts: 8022
Joined: Mon Apr 11, 2011 1:48 pm

Re: BHers, what is your Roth IRA %?

Post by TomatoTomahto » Fri Jan 11, 2019 3:22 pm

stimulacra wrote:
Fri Jan 11, 2019 3:05 pm
Maybe 2019 is the year I max out my Roth IRA :)
2019 is the year we started maxing out the Roth 401k.
Okay, I get it; I won't be political or controversial. The Earth is flat.

User avatar
Ice-9
Posts: 1356
Joined: Wed Oct 15, 2008 12:40 pm
Location: Rockville, MD

Re: BHers, what is your Roth IRA %?

Post by Ice-9 » Fri Jan 11, 2019 3:25 pm

Approximately 11% of my retirement portfolio is in my Roth IRA. Just short of 80% is in tax-deferred accounts.

Scrolling through this thread, I'm realizing I'm on the low end of Roth percentage among Bogleheads.

Topic Author
infotrader
Posts: 198
Joined: Tue Feb 28, 2017 2:39 pm

Re: BHers, what is your Roth IRA %?

Post by infotrader » Sat Jan 26, 2019 11:17 am

RickBoglehead wrote:
Fri Jan 11, 2019 10:39 am
JW-Retired wrote:
Fri Jan 11, 2019 9:50 am
Rick,
It is hard for me to imagine how this works well but perhaps it does? Can you explain more? Down to zero tax deferred seems extreme.

What marginal tax are you paying for all the Roth conversions now, versus your effective marginal tax in your post 70 situation when collecting max SS? Do you have such a large taxable account that the SS tax is going to be fully phased in on the taxable portfolio dividends/interest/realized cap gains?

How does it work? :?:
JW
We hopped on the IRA bandwagon a very long time ago, and hopped on the ROTH IRA bandwagon when they first came out.

I had some years where our income was very low. In those years I did ROTH conversions. Not great for income (losing a job), but great for conversions. In some years we were in the bottom tier. Given when that was, the IRAs weren't large at that time. So I could convert a bunch, and then they grew via good investments. So it's not like I had a $1 million IRA and have been converting it. Each year when I did conversions, I sat down with TurboTax and played with the amount I was going to convert to see the income tax ramifications. As of matter of fact, for 2017 I ended up having to reverse part of my conversion (last year to do that) because I did too much.

Each year I do ROTH IRAs, maxed out, including the $1,000 50+.

Due to changing employers earlier in my career, my 401ks all got converted to IRAs, which then led me to do ROTH conversions on them. I also took advantage when they allowed you to spread out the tax on your conversions, had forgotten about that.

When we collect Social Security, my expectation is that between SS, pension, interest, dividends, and cap gains that we will end up in an equal or higher tax bracket than we are most years (2018 may be an exception). In fact, I may be changing my ROTH 2018 contributions to taxable, and changing my 2018 individual 401K contribution to taxable once I am confident that TurboTax is updated and I run the numbers. If it makes a big enough difference, I'll change them. In 2018, my taxable brokerage account peak (picked September, may not have found the exact peak date) was around 44% higher than my cost. I have years of built up gains including in Primecap. It's conceivable that I'll be selling investments with 75% - 100% gains by the time I need the funds.

I also follow the thought process that if invest $6,000 today, and pay the tax on that income, that this $6,000 will be 2 or 3 times that when I retire. Therefore, I'd rather pay tax on $6,000 today than pay tax on $6,000 or $12,000 in ten or more years. If tax rates are the same (doubtful), and I'm in the same tax bracket (uncertain), then you could argue that it's better to invest that tax money today and let it work for you then to pay tax today. All things being equal, I'll give up that potential growth on the tax owed today, and not have to pay taxes in retirement.

Lastly, I have the following beliefs, which may not be correct, but they're mine.

1) I believe that the government will never take away the ROTH benefit, i.e. that everything grows tax free and that all withdrawals are tax free. There would be a revolt. Not a political statement, but if this went away or was partially taxed, it would have to be for FUTURE contributions, i.e. we'd be grandfathered.

2) I also believe that as the years go on, the government is going to have to raise tax rates to pay the bills. Therefore, tax rates in ten years will be higher than they are today. Perhaps substantially higher.

It could be that I've been naive over the years and done conversions that weren't perfectly figured out as compared to those that have figured this out to the exact digit. Maybe I'll have big tax deductions in retirement and wish I had taxable income to offset them. That could be.

I'm ok with that.
Good strategy.

mtmingus
Posts: 66
Joined: Sun Jan 07, 2018 4:15 pm
Location: Illinois

Re: BHers, what is your Roth IRA %?

Post by mtmingus » Sat Jan 26, 2019 11:43 am

Ours are not ideal. Very tilted proportion: tax deferred : tax free : taxable = 70 : 25 : 5

User avatar
Davinci
Posts: 197
Joined: Sun Oct 14, 2018 3:36 am

Re: BHers, what is your Roth IRA %?

Post by Davinci » Sat Jan 26, 2019 11:52 am

BHers, what is your Roth IRA %?
I read in this forum the true value of every dollar on the different accounts.

Based on that feedback, I am trying to balance my dollars within the possibilities of what I can do on the different accounts.

Not shooting for a specific percentage but making sure I am well balanced in my dollars to avoid a lot of taxes in retirement.
" Simplicity is the ultimate sophistication" Leonardo Da Vinci.

letsgobobby
Posts: 11950
Joined: Fri Sep 18, 2009 1:10 am

Re: BHers, what is your Roth IRA %?

Post by letsgobobby » Sat Jan 26, 2019 12:25 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.
There is no best or ideal percentage, as it will vary with individual circumstances. We are currently 44% taxable, 38% pretax, 18% Roth/HSA. I would gladly be 100% Roth but not if I had to pay the taxes!

Topic Author
infotrader
Posts: 198
Joined: Tue Feb 28, 2017 2:39 pm

Re: BHers, what is your Roth IRA %?

Post by infotrader » Sat Jan 26, 2019 12:28 pm

Davinci wrote:
Sat Jan 26, 2019 11:52 am
BHers, what is your Roth IRA %?
I read in this forum the true value of every dollar on the different accounts.

Based on that feedback, I am trying to balance my dollars within the possibilities of what I can do on the different accounts.

Not shooting for a specific percentage but making sure I am well balanced in my dollars to avoid a lot of taxes in retirement.
Roth IRA is an extra leg in your retirement tool. The more the better.
Image

User avatar
Just sayin...
Posts: 220
Joined: Tue Oct 09, 2007 10:12 am

Re: BHers, what is your Roth IRA %?

Post by Just sayin... » Sat Jan 26, 2019 12:37 pm

Brokerage (taxable): 57.4%
IRA (and similar tax-deferred investments): 29.4%
Roth (tax-free): 13.2%

(Edit to correct math error)
Last edited by Just sayin... on Sat Jan 26, 2019 12:41 pm, edited 2 times in total.

wootwoot
Posts: 249
Joined: Tue Jan 27, 2009 7:37 pm

Re: BHers, what is your Roth IRA %?

Post by wootwoot » Sat Jan 26, 2019 12:39 pm

7% roth

Horsefly
Posts: 375
Joined: Sat Oct 24, 2015 8:13 am
Location: Colorado, mostly

Re: BHers, what is your Roth IRA %?

Post by Horsefly » Sat Jan 26, 2019 12:41 pm

We are currently about 20% taxable, 8% Roth, and 72% traditional IRA.

I was MAGI limited from ever doing Roth IRA contributions, but a few years before we retired in 2013 megacorp started offering a Roth 401k. I still mostly did the tax deferred 401k to lower my current year taxes, but did start the Roth 401k. That gave me a small seed for the current Roth IRA, but most of what we have in Roth is from conversions we've done since retiring.

I agree with RickBoglehead that taxes in the future are very likely to be higher than they are now. Based only on the pre-2018 tax brackets, it appears we will be in the same or higher tax bracket once RMDs start. For that reason we are doing Roth conversions in a fairly big way now, and I anticipate we will continue until we get close to 70. Our taxable account should cover us for most of that time.

I would hope to get to the point that we are closer to 20% Roth before we start RMDs.

dknightd
Posts: 1273
Joined: Wed Mar 07, 2018 11:57 am

Re: BHers, what is your Roth IRA %?

Post by dknightd » Sat Jan 26, 2019 1:01 pm

I don't have much Roth. Currently about 1% ! My plan is to convert as much as possible without bumping me up a tax bracket. Hopefully convert enough so RMDs do not bump me up a tax bracket. In the end I don't think it will matter much. I would like to have more Roth in case I don't need it, so can pass it on tax free, or in case I do need it but don't want to pay tax on it. I suspect when I'm 70 I'll have about 25-50% in Roth. Time will tell ;)

edit: Honestly I don't mind paying taxes. It means I'm not living in poverty, and can help support the government.

User avatar
Davinci
Posts: 197
Joined: Sun Oct 14, 2018 3:36 am

Re: BHers, what is your Roth IRA %?

Post by Davinci » Sat Jan 26, 2019 1:24 pm

Roth IRA is an extra leg in your retirement tool. The more the better.
Thank you infotrader good perspective and input!

I will emphasize to add more to the Roth IRAs to grow that leg especially since finding about I can do Mega Backdoor, that should help grow that leg.

I also plan yearly conversions to Roth when I am eligible and keeping taxes as low as possible, is that a good strategy?
" Simplicity is the ultimate sophistication" Leonardo Da Vinci.

Mickey7
Posts: 101
Joined: Tue Jun 20, 2017 1:52 pm

Re: BHers, what is your Roth IRA %?

Post by Mickey7 » Sun Jan 27, 2019 1:28 am

With pension and SS I will have more income than I currently have considering retirement, 403b, Roth and HSA contributions are all maxed. At retirement this year (age 67) I will be at:
10% HSA
33% Roth
57% 403b

As of now I do not include any of my EF money market funds though I am wondering if maybe it would be wise to start putting a portion into CDs or TSM.

pascalwager
Posts: 1354
Joined: Mon Oct 31, 2011 8:36 pm

Re: BHers, what is your Roth IRA %?

Post by pascalwager » Sun Jan 27, 2019 3:04 am

My Roth IRA: 6% of portfolio.
52/48 stocks/money market

Carl53
Posts: 1695
Joined: Sun Mar 07, 2010 8:26 pm

Re: BHers, what is your Roth IRA %?

Post by Carl53 » Sun Jan 27, 2019 5:44 am

Roths are now up to 31.5%, a percentage growing about 3% per year, primarily due to conversions. We got in on the Roth conversion thing back when they offered spreading taxes over two years. When I first set up a spreadsheet for retirement at about that time it appeared that if we could get the 401k and TIRAs down to perhaps 700k by 70 for us by gradual conversions that we could avoid the 25% (now 22%) bracket during both the conversion period and post 70 when SS and RMDs kick in.

The good news is that we have barely made a dent in the TIRA balance due to growth that exceeded my low expectations. Our thinking has changed a bit. At current tax rates, we convert right up to the 22% bracket and once age 70 is attained we will be somewhat into the 22% bracket. Doing more now would not likely save in the future, although the bracket may eventually go back to 25%. This I currently consider to be in the noise. The Roths will most likely end up being inheritance and right now I don't have a good read on what kind of tax bracket the potential inheritors might be in but probably 22% if I had to guess.

We are now considering that once RMDs kick in, QCDs will be generously taken advantage of. Certainly at least enough to wipe out the 22% bracket and if more is desired, conversions can refill the 12% bracket. Should we have significant health care problems down the road or choose to join a CCRC (likely) it appears that having pretax funds may be advantageous to do so. Also, if it turns out that there is still a million in the TIRA when we pass, a significant portion is slated to go to charity.

Topic Author
infotrader
Posts: 198
Joined: Tue Feb 28, 2017 2:39 pm

Re: BHers, what is your Roth IRA %?

Post by infotrader » Sun Jan 27, 2019 11:37 am

Carl53 wrote:
Sun Jan 27, 2019 5:44 am
Roths are now up to 31.5%, a percentage growing about 3% per year, primarily due to conversions. We got in on the Roth conversion thing back when they offered spreading taxes over two years. When I first set up a spreadsheet for retirement at about that time it appeared that if we could get the 401k and TIRAs down to perhaps 700k by 70 for us by gradual conversions that we could avoid the 25% (now 22%) bracket during both the conversion period and post 70 when SS and RMDs kick in.

The good news is that we have barely made a dent in the TIRA balance due to growth that exceeded my low expectations. Our thinking has changed a bit. At current tax rates, we convert right up to the 22% bracket and once age 70 is attained we will be somewhat into the 22% bracket. Doing more now would not likely save in the future, although the bracket may eventually go back to 25%. This I currently consider to be in the noise. The Roths will most likely end up being inheritance and right now I don't have a good read on what kind of tax bracket the potential inheritors might be in but probably 22% if I had to guess.

We are now considering that once RMDs kick in, QCDs will be generously taken advantage of. Certainly at least enough to wipe out the 22% bracket and if more is desired, conversions can refill the 12% bracket. Should we have significant health care problems down the road or choose to join a CCRC (likely) it appears that having pretax funds may be advantageous to do so. Also, if it turns out that there is still a million in the TIRA when we pass, a significant portion is slated to go to charity.
It is a good strategy even if it means going into the 22% bracket.
1) We need to take advantage of the current tax code which will expire in 6 years.
2) If you try to dodge the next tax bracket, it is quite possible (in many cases, certain) that you will enter it any way due to RMD and bigger ss payment when you are 70, so if you convert more earlier on, it will give your money more time for tax free growth.

2015
Posts: 2667
Joined: Mon Feb 10, 2014 2:32 pm

Re: BHers, what is your Roth IRA %?

Post by 2015 » Sun Jan 27, 2019 12:58 pm

Back when I cared about these things I did know that approx. 2 of every 3 dollars of my PF were either tax-free or taxable. It's much more so now, but I couldn't say how much. As a result of tax gain harvesting a couple years ago, my capital gains are now fairly negligible. Doing roth conversions now until delayed SS at age 70. Plan to get around to TLH when my life settles down. Taxes are never going to be a great concern for me.

User avatar
Artsdoctor
Posts: 3750
Joined: Thu Jun 28, 2012 3:09 pm
Location: Los Angeles, CA

Re: BHers, what is your Roth IRA %?

Post by Artsdoctor » Sun Jan 27, 2019 1:06 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.)
You were very, very smart. Great job!

pdavi21
Posts: 535
Joined: Sat Jan 30, 2016 4:04 pm

Re: BHers, what is your Roth IRA %?

Post by pdavi21 » Sun Jan 27, 2019 1:31 pm

Ideal is 100 percent. Mine is about 50% on tax advantaged assets. (Will be higher this year). Also, you should count ROTH 401K as ROTH IRA because you can roll over prior to RMDs with no penalties.

pasadena
Posts: 262
Joined: Sat Jul 02, 2016 1:23 am

Re: BHers, what is your Roth IRA %?

Post by pasadena » Sun Jan 27, 2019 1:47 pm

Currently 16% of my total portfolio. I expect that number to increase significantly since I just started having access to the Mega Backdoor this year and will do my best to max that out.

User avatar
goodenyou
Posts: 1548
Joined: Sun Jan 31, 2010 11:57 pm
Location: Skating to Where the Puck is Going to Be..or on the golf course

Re: BHers, what is your Roth IRA %?

Post by goodenyou » Sun Jan 27, 2019 5:51 pm

0%. Ineligible due to income limits. Won't convert now at my high marginal rate. Will convert if/when we retire in our late 50s/early 60s and are in a much lower marginal bracket. I am in the process of deciding if rolling over all our IRAs to 401(k)s for my wife and I is worth the aggravation to avoid the pro rata rule. We have a lot of steps to do in order to be eligible to do a Backdoor Roth without the pro rata rule. It's a real PIA.
"Ignorance more frequently begets confidence than does knowledge" | "The best years you have left are the ones you have right now"

User avatar
changingtimes
Posts: 89
Joined: Mon Jul 24, 2017 9:28 am

Re: BHers, what is your Roth IRA %?

Post by changingtimes » Sun Jan 27, 2019 9:59 pm

columbia wrote:
Wed Jan 09, 2019 6:24 pm
About 45%.

I believe that anyone expecting to eventually have and invest money from an inherited IRA should have a Roth: never pay another dime of taxes (on the amount you can eventually place in a Roth, after legally required distribution).
Can you expand on this?

MnD
Posts: 3987
Joined: Mon Jan 14, 2008 12:41 pm

Re: BHers, what is your Roth IRA %?

Post by MnD » Mon Jan 28, 2019 12:53 pm

celia wrote:
Fri Jan 11, 2019 3:18 pm
michaeljc70 wrote:
Fri Jan 11, 2019 3:04 pm
Put another way, if you are saving for a certain income to roughly match your working income that will come from RMDs and SS, it is unlikely that that would ever be more than your working income.
But your RMDs won't stay level, unless you have a low growth rate in the tax-deferred account. They start at 3.65% and increase each year while the tax-deferred account continues to grow until your mid-80s (on average). As long as the amount you withdraw each year is less than the growth in the account, the account will keep growing. Of course, there will be some "down" years, so maybe that will help keep a lid on the growth. :D
We deferred our income while working all at 28%, 31% and some even higher. Now in the middle of the 22% bracket in early retirement (mid-50's) we are spending from tax deferred that is being taxed at a blend of 12% and 22% and on a net income basis providing the same non-frugal financial lifestyle as when working. Pension and some post-employment employer income fills up the 0, 10% and part of the 12% brackets. Our decision to go traditional when working and in higher brackets and spending in retirement from portfolio in much lower brackets has been tremendously beneficial. Currently Roth would have been a clear loser and that will persist for many many years and probably until "check-out" time. In sum it will be very unlikely that going Roth initially or with conversions would ever pay off and I have run many very detailed scenarios.

In my opinion, absent an individualized and detailed analysis and forecast, much of the general Roth cheerleading seems to reflect an asymmetrical aversion to paying taxes in retirement, along with placing bets due to a lot of assumptions about tax rates going much higher, living forever and spending little or none of the money one had put aside presumably to fund ones retirement. While also ignoring possibilities such as a VAT and/or means testing retirement benefits on the basis of all retirement account withdrawals or balances.

Topic Author
infotrader
Posts: 198
Joined: Tue Feb 28, 2017 2:39 pm

Re: BHers, what is your Roth IRA %?

Post by infotrader » Mon Jan 28, 2019 1:13 pm

MnD wrote:
Mon Jan 28, 2019 12:53 pm
In my opinion, absent an individualized and detailed analysis and forecast, much of the general Roth cheerleading seems to reflect an asymmetrical aversion to paying taxes in retirement, along with placing bets due to a lot of assumptions about tax rates going much higher, living forever and spending little or none of the money one had put aside presumably to fund ones retirement. While also ignoring possibilities such as a VAT and/or means testing retirement benefits on the basis of all retirement account withdrawals or balances.
That is true. Roth is just one leg on the retirement stool, and you have take a holistic approach.

KlangFool
Posts: 11552
Joined: Sat Oct 11, 2008 12:35 pm

Re: BHers, what is your Roth IRA %?

Post by KlangFool » Mon Jan 28, 2019 1:26 pm

OP,

45/45/10 ( Tax-deferred/Taxable/Roth)

KlangFool

zengolf2011
Posts: 123
Joined: Tue Jul 21, 2015 1:27 pm

Re: BHers, what is your Roth IRA %?

Post by zengolf2011 » Mon Jan 28, 2019 1:40 pm

My Roth is 10%, but wish it were more. I made lots of financial mistakes, and this was one. My situation was complicated a bit by continuing earning some unplanned income after retirement (and starting SS). But I also failed to make Roth contributions before retirement, and started conversions too late. Now, at 72 and taking RMDs, I think that ship has sailed. I left money on the table. Too soon old, too late smart. Hope others learn from my mistakes. On the bright side, I've ended up OK. Proves Mr. Bogle's point: one need only get a few things right.

Post Reply