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Author: BruceCM Big red star, 1000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76095  
Subject: Re: IRA/Roth Date: 12/2/2013 5:01 PM
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No employer, no salary, money in the bank and stocks, age 62. Is there a way to contribute to a Roth or IRA or equivalent which would help offset taxes and dividends on stocks yet grow without tax until I need it?

There are a couple of theoretically possible ways:
1. Earned income from a spouse that at least equals both of your IRA contributions for the year
2. Alimony being paid by a former spouse per a divorce decree.

You could certainly do a traditional IRA to Roth IRA conversion, but this isn't adding any additional dollars to your IRA holdings...only shifting them.

I agree with the former post that a no-load, low cost deferred Variable Annuity is a way to get your annual earnings tax deferred (not "tax free"). But even the low cost DVA offered by Vanguard carries added fees that tax deferral would have to make up for. And keep in mind, that although there is no required distributions from a DVA (although some contracts require you to annuitize the balance by a certain late age), withdrawals will come out earnings first.

A common asset allocation strategy is to hold tax inefficient investments, such as high dividend stocks, bonds, REITs...in tax deferred accounts and tax efficient investments (growth and most small cap stocks, muni bonds) in taxable accounts. It would be ill-advised to misallocate your portfolio towards tax efficient holdings simply to avoid tax on taxable gains.

BruceM
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