Author Topic: IRA or taxable account  (Read 1367 times)

tryingtosave

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IRA or taxable account
« on: November 30, 2016, 01:58:56 PM »
Hi all

I have a quick question. Should I invest in an IRA account if I don't get any deductions due to high income? I know the money in IRA grows tax free which is a plus but I cant take it out till a certain age where in a taxable account I can take it out anytime I want(although I most likely wont touch that money anyways). Just wondering if I am missing something.

Thanks

seattlecyclone

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Re: IRA or taxable account
« Reply #1 on: November 30, 2016, 03:26:39 PM »
If you make too much to deduct traditional IRA contributions, take a look at Roth contributions. It won't help your income now, but the growth will generally be tax-free. That's often better than what you'll achieve in a taxable account. If you make too much money to contribute to a Roth IRA, look into the backdoor Roth.

effigy98

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Re: IRA or taxable account
« Reply #2 on: November 30, 2016, 04:46:40 PM »
I do an extra 22k or so into IRA post tax on top of maxing out 401k, then do a backdoor roth conversion. In 5 years I can withdraw that 22k penalty free. Then your gains grow tax free. You can keep doing that so you have a steady stream of 22k or so per year until you get the the retirement age.

MDM

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Re: IRA or taxable account
« Reply #3 on: November 30, 2016, 09:10:53 PM »
I do an extra 22k or so into IRA....
I hope there's a typo or two there, because you aren't allowed to contribute that much to IRAs.  See Retirement Topics - IRA Contribution Limits.

VoteCthulu

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Re: IRA or taxable account
« Reply #4 on: December 01, 2016, 10:58:17 AM »
This depends a lot on your personal situation and preferences, but after maxing out all tax advantaged options (401k, roth, HSA, etc.) I prefer to invest my remailing cash in my Vanguard taxable account.

This serves as an extra emergency fund that's always available penalty free, and the taxes on low dividend domestic stock funds aren't that bad until you need to sell, which will hopefully be after retirement when I'll pay 0% cap gains (unless Trump changes that).