Question: If my wife and I fall into the 15% tax rate (married, filing jointly, income under $77,200), does it behoove us to move our investments out of our taxable account and into our ROTH IRA?

I have a tax-based question. If my wife and I fall into the 15% tax rate (married, filing jointly, income under $77,200), does it behoove us to move our investments out of our taxable account and into our ROTH IRA? All of these positions are dividend paying, and I’m showing that as a part of the 15% bracket, we will not pay any taxes on capital gains or dividends received. Would keeping our investments in our taxable account allow us more flexibility moving forward? What advantages does a ROTH IRA offer us if we do not move out of this tax bracket soon? Thank you much. I appreciate the valuable feedback.

Jake Blanchard: roth Ira profits are tax free. but you can’t withdraw until 59.5 i believe.

Adam Sayovitz: Yes, but the profits in my existing taxable account would be tax free as well as long as I am in the 15% bracket, correct?

Jake Blanchard: correct. but the taxable amount could push you over into a new income bracket..

Adam Sayovitz: Jake Blanchard, for arguments sake, let’s say that I remain in the existing bracket.

Jake Blanchard: that’s kind of a hard question to answer. because if you’re investments keep growing you’re going to get pushed up into a new bracket

Adam Sayovitz: Jake Blanchard, true. And at that point, I’d likely want to begin moving them to my ROTH. But does moving them today, or soon, serve a purpose?

Jake Blanchard: eventually* but today? Nope. just keep an eye on it.

Jake Blanchard: but you should still contribute to the Roth as you can.

Scott Rubin: Anything you sell now will count towards your 2018 taxes. But you are in the right track. I keep a spreadsheet with projected taxes and always max out the 15% bracket. Usually to get assets out of a traditional ira in an attempt to keep RMDs low in future years. In years past I should have converted some from the traditional ira to the Roth IRA, but I didn’t think the market was going to take off.

Jon Wheeler: the Roth has contribution limits of $5500 per year per person, so waiting until your portfolio is a certain size to move funds over won’t work.

David Linnell: Yes, you should be moving 11k a year into Roths. No reason to have money in a taxable account when you can move it to free. There are no negatives to having money in a Roth

Adam Sayovitz: But what advantage does the 11k serve in a Roth compared to my taxable account if I’m not being taxed on capital gains or dividends as a part of the 15% bracket?

David Linnell: You will not owe taxes on any capital gains or dividends

David Linnell: I see what you are saying, you don’t pay any taxes on any gains?

Jake Blanchard: if you’re in the 10% or 15% you don’t.

Adam Sayovitz: David Linnell, I do not. As long as I’m in the 15% bracket.

David Linnell: Ok then then it would not matter unless something changes.

Jake Blanchard: On qualified divs.not any divs

Ted Ngo: The growth in your Roth investment will be guaranteed tax free in the future. If your income tax brackets change or tax laws change, then your investment outside of your roth could be come taxable.

Richard Mauer: The new tax law is 12% under 77.4k

Bob Stag: Capital gains are taxable, as is interest in savings account. Pretty much considered income. So, yes, no matter what your capital gain is, you will pay taxes.

Jake Blanchard: Bob Stag they’re but if you’re in 10-15% bracket, you pay 0%

Jake Blanchard: on long term

Bob Stag: Jake Blanchard , I will check that out, I am not in that bracket, but then, in that bracket, I figure no taxes owed, Ar you planning to grow your income in the future, and if so, what will your tax bracket be when you retire?

Jake Blanchard: that’s basically what i said. lol

Bob Stag: So, you figure you will stay in the same tax bracket the rest of your working life? And what age are you?

David Linnell: There are also some benefits when passing a Roth to your heirs, they can stretch it out and grow tax free throughout their lifetime.

Jake Blanchard: I plan on growing mine lol

Bob Stag: Then you will not be in that tax bracket. So, ROTH is the way to go.

Jake Blanchard: i know, but i don’t know what the original posters plans are

David Linnell: Plus, you never know what tax laws will change to.

Deuel Stephens: It’s best to talk to a tax professional…but many would recommend an Roth… your dividends can grow tax free until you start to withdraw.

Jake Blanchard: I do taxes for a living lol

Jeremy Lvancevic: I’d do the ROTH. Simply for the reason your investments will cause your tax bracket to go up anyways. Unless you plan on doing this for a very short term play

Bob Stag: How old are you? That would have an impact on any decision. If you have years left to work (young, unlike me, old), the you can be sure your tax rate will go up in the future. ROTH is the way to go, if you are young, and for me, even though I am old.

Joan Hebert: if you put into a tax shelter – Roth or trad IRA – you won’t pay taxes on it now. Roth – no taxes when you take out, but taxes will be owed when you take it out of a trad ira, rollover IRA. I’d shelter it – esp if you don’t need the dividends to live on, and this is $ you want for retiremnt (untouchable).

Brent Meadors: Deff get with a Tax Proff, I keep our income at 15% now 12% bracket because long term capital gains / dividends are taxed at 0%. If I do swing trade or plan on selling a stock I will buy/hold inside my Roth IRA and sell. Today Sold OMC for a nice profit + dividend capture inside my Roth IRA and bought KMB at a dip, plan on holding it long term inside Roth IRA ( but if it jumped up a bit I don’t mind selling and buying something else on a dip)

Thi Uong: So do you purposely earn less to keep your income within the 15% bracket ?

Brent Meadors: Thi Uong You don’t need to earn less, if you make over 100k as a married couple you can defer 18,000 into a 401(k), Married that’s 32,000 adjusted. You can also do IRA of 5,500 or married 11,000. In a year your adjusted income could be set single: 23,500 or married 47,000, which could lower your adjustable income below the 25% to 15%.

Hugh McMillan: If you do not plan to use the money before 59 ½ in general put it into a ROTH. Even if you do not need the money at 70 ½ there is no manditory distributions until you die. Then your heirs must start withdrawals.

David Linnell: they can stretch it out a keep growing it tax free, win win

Dave Shaheen: This is exactly what I will be doing in 2018. I am over 60, so I can withdraw from my IRA without a tax penalty. In the 2017 tax , I was in the 25% tax bracket. In 2108, I will be in the 22% tax bracket, so I will be moving as much money as I can from a traditional IRA to a Roth IRA without exceeding the top of the 22% tax bracket.

Stefan Sharpe: One important thing that is not being discussed is that you can withdraw your 5500 (11000) contribution tax free. This will accumulate each year as well.

Jake Blanchard: ^ and penalty free

Stefan Sharpe: If I were you I would put your money in before April so you get the 2017 contribution then put another 11000 in for you and your wife in 2018. Very few reasons to not max these accounts as once the time period is gone you can’t max them again.

Bill Lyon: Adam, take into account that REIT divs are non-qualified and they will be treated as regular income, unless in a tax-free account- i.e. IRA.

Richard Horta: I never knew about this. So if I’m in the 15% bracket I don’t have to pay taxes on long term capital gains or dividends? If so how is it reported? All my current positions are already long term.

Thi Uong: I was gonna ask the same question lol. I wasn’t sure if I read that wrong or what

Thi Uong: Did he mean to say that you should put money in the Roth so that you don’t have to pay capital gains/ dividends or that if you’re in the 15% income bracket you don’t have to pay taxes on capital gain/div 🤔

Ruben Srs: That’s not true..there is certaim threshold beyond which you will not pay taxes for long term gains and qualified dividends.. even if you are in 15% tax bracket but your investments gains and divis are big enough then you will pay 15-20% on part of long term capital gains and 15% on qualified dividends

Ruben Srs: You will not pay taxes only for part of long term gains and qualified divis.. if your taxable income is less than 75300$ for married filling jointly lets say 70000$ then you will not pay taxes for first 5300$ of your cap gains and divis.. the amount above that will be taxable

Brent Meadors:…/long-term-capital…/ar-BBGzSux

Long-Term Capital Gains Tax Rates in 2018

Ruben Srs: Dont forget that capital gain may change your tax bracket 🙂

Brent Meadors: Yes, always aim lower by X amount of your dividends and realized capital gains.

Ruben Srs: Right