No. of Recommendations: 0
You can get "killed by taxes" because of the Minimum Distributions you must take starting at age 70 1/2. We are in relatively modest circumstances with just his social security, a small pension and interest income. I have a few years before the MRDs kick in but my husband has only 2 and now I'm scrambling to move money into Roth IRAs to minimize the future tax bite and keep today's taxes at lowest possible rate. Part of the problem is that we won't need the MRDs to live on so the distributions will have to go into taxable accounts that will add interest/dividend income. And assuming that the 401k is growing at even a modest rate each year, the MRDs get larger each year since you have a shorter life expectancy.

Of course everyone's situation is different so what works for us is not necessarily the best for you but I would vote for maximum Roth contribution and whatever you can afford in your 401k.

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.