I think the planning for how much after tax spending can be extracted from a store of wealth in different kinds of accounts is going to be better estimated on a cash flow basis at point of withdrawal and taxation thereof than by trying to assess what money in different accounts is "worth" ahead of the transactions. As you say, taxation is an exercise in detail and almost impossible to model as a life time process.Money in a Roth account is usually worth more than the same amount in a taxable account, which is usually worth more than the same amount in a pre-tax/tax-deferred account, specially if worth more than a $29,200 standard deduction, and that you would spend that year.This will probably sound like a silly question, but don't USA taxable accounts make more sense than nontaxable (IRAs, and 401(k)s etc) for long term holdings, especially for people who are self employed and don't receive any matching benefits?
Won't long term capitals gains in most cases be lower than ones income tax rate? Plus there aren't any contribution limits.
However if you were given a lump-sum of wages, and could store it in a Roth ( pay income taxes that year ), or
pre-tax account ( pay income taxes in many years ), or
regular taxable account ( pay income taxes this year, and maybe LTCG taxes in many years ),
the answer depends on many individual details and exceptions.
Statistics: Posted by dbr — Thu Jul 25, 2024 8:08 am — Replies 46 — Views 4383