No. of Recommendations: 0
Greetings, Gbaker, and welcome.

<<My wife and I are 30 yrs old and we've accumulated about $200,000 over the last five years in mutual funds, 401k, 403b, Roth-IRA's and individual stocks. About half is in tax-deferred accounts and half is in taxable accounts. From a distribution standpoint, should we continue to max out the tax-deferred savings or would it be in our best interest to cut back on it and invest primarily in taxable accounts and the Roth-IRA's? I want to maximize growth but at the same time minimize the tax hit when we retire. I suspect our tax bracket will be higher when we retire than the current 20% for long-term gains.>>

Anything in a tax-deferred investment will be taxed at ordinary rates on withdrawal. Taxable accounts can be structured to be mostly taxed at lower capital gains rates on gains, and the Roth can escape all gains taxation. Whether you should concentrate on taxable investments is for you to decide based on your present and future tax brackets. If you expect to be in a much higher bracket at retirement, then perhaps taxable investments now might make sense. Only you and your tax advisor can run those numbers, though.

You may want to read Step 4 of the 13 Steps to Foolish Retirement Planning to see if a taxable investment in lieu of 401k/403b contributions beyond an employer's match make sense for you. You can find that missive at:

That step won't solve your dilemma, but it may help.


Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.