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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19224  
Subject: Re: port for retirement and in retirement Date: 2/9/2012 9:39 PM
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Culcha, you seem to have thought this all out very carefully. I agree that Roth IRA is the best place for your funds to grow dividend stocks or for that matter index funds. The usual problem is that the $5K annual contribution limit poses quite a restriction on how much you can put there. You can also convert an IRA to a Roth to boost the amount.

Consider that if you contribute $5K every year for 30 years, your contribution is $150K, and with excellent investment returns might grow to $450K, a nice sum to supplement a retirement plan, but not enough to retire on for most. So to have a shot at it you must diligently contribute the max every year. The higher pretax contribution limits of 401ks make them very attractive.

Note that your thoughts about dividend tax rates (and 15% capital gains rates) depend on renewal of the Bush tax cuts, which expire at the end of this year. Your Roth and 401k strategies are safest. The others could change depending on what Congress decides to do.

As for ETFs vs Index funds, they are approximately equivalent. In a brokerage account, some mutual funds are on a no fee list, but others require transaction fees that are often higher than the commissions charged on ETF trades. As usual, check the expense ratios and the fees associated with the ones you are considering in your accounts before you decide.
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