I have a certain allocation of stocks vs. bonds overall.
In the past, I have put some of the stock portion into my Traditional account, which made sense at the time given the space I had in various retirement accounts then. However I now have a lot more Roth space opened up. Since it seems smart to have the higher growth investments in Roth and lower growth investments in Traditional - both due to tax and RMD purposes - it seems to me a good idea to relocate so as to put the stock all in the Roth and replace the stock portion in Traditional with bonds.
First, I'm curious if people agree with that. (I do question it a bit because could it be good to at least let some higher growth happen in Traditional so I will have enough to fill the lower brackets in retirement? I already don't have very much in Traditional so I worry I'll actually wish I had a little more to use in different ways down the road. But this clashes with the general idea that it's smarter to have higher growth in Roth. So I'm a little conflicted.)
Second, I'm curious if you'd consider future taxes in doing this. Here's what I mean.
Let's say I have $1000 of VTI in Traditional. If I relocate that to Roth, do I sell the $1000 VTI in Traditional and buy $1000 VTI in Roth? Or do I consider taxes: $1000 VTI in Traditional, if you assume you'll have to pay 20% Federal and State Taxes on it, is actually equivalent to $800 VTI in Roth. So should I instead sell the $1000 VTI in Traditional and buy only $800 in Roth and consider that even?
In the past, I have put some of the stock portion into my Traditional account, which made sense at the time given the space I had in various retirement accounts then. However I now have a lot more Roth space opened up. Since it seems smart to have the higher growth investments in Roth and lower growth investments in Traditional - both due to tax and RMD purposes - it seems to me a good idea to relocate so as to put the stock all in the Roth and replace the stock portion in Traditional with bonds.
First, I'm curious if people agree with that. (I do question it a bit because could it be good to at least let some higher growth happen in Traditional so I will have enough to fill the lower brackets in retirement? I already don't have very much in Traditional so I worry I'll actually wish I had a little more to use in different ways down the road. But this clashes with the general idea that it's smarter to have higher growth in Roth. So I'm a little conflicted.)
Second, I'm curious if you'd consider future taxes in doing this. Here's what I mean.
Let's say I have $1000 of VTI in Traditional. If I relocate that to Roth, do I sell the $1000 VTI in Traditional and buy $1000 VTI in Roth? Or do I consider taxes: $1000 VTI in Traditional, if you assume you'll have to pay 20% Federal and State Taxes on it, is actually equivalent to $800 VTI in Roth. So should I instead sell the $1000 VTI in Traditional and buy only $800 in Roth and consider that even?
Statistics: Posted by GoldenBear17 — Tue Apr 15, 2025 6:21 am — Replies 0 — Views 27