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Author: Hawkwin Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76406  
Subject: Re: Splitting assets between IRA / Roth Date: 2/17/2014 2:20 PM
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I am trying to figure out what assets to put in Roths and what to put in IRAs. My thinking is that it would be better to put assets with higher expected appreciation (speculative stocks and stock funds) in the Roth which will never be taxed and put assets with lower expected appreciation (bonds and more conservative stocks) in the IRA where we need to take annual minimum distributions and pay taxes.

Not a bad way to do it as that would likely result in a lower RMD requirement every year. Note, when you take your RMD, you can take it "in-kind" and have the IRA assets transfered out and into a taxable brokerage account. Those positions would now have a cost basis based on their value on the day of the transfer. You would still need to pay taxes on the amount but this would avoid any tranasction fees you might otherwise have.

You can also do this as you make your annual IRA to Roth conversions.

I am assuming that you do not need the income from either bucket of money so any lack of appreciation on the IRA (or losses on the Roth) would have limited impact on your financial needs. Good luck and don't forget that you can undo a conversion if you find out it puts you in a higher tax bracket OR if you are sitting on losses at the end of the year from the conversion.
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