Is there a Roth withdrawal strategy for growth?

[lefty]

Hope this question makes sense.
Are there Roth IRA withdrawal strategies to grow your stash "more" efficiently?
If there is no such thing, so be it. I am just curious.

Sometime ago someone asked a question about the order of selling from a taxable brokerage to minimize taxes via Vanguard (make sure its LTCG, using SpecID...etc).
Hence I was wondering about non taxable factors to consider when selling in Roth.

Assume over 59.5 and retired.

[dandarc]

In a Roth IRA, the tax savings at withdrawal come from optimizing your Roth / Traditional / Taxable withdrawals over your remaining lifetime.

The simplest comparison would be Traditional vs. Roth - if you take that marginal dollar from traditional, you'll pay your marginal income tax rate on it today. If you take it from Roth, you pay nothing. This has tax impacts both now and into the future.

So you estimate lifetime cash needs and tax implications and try to minimize over your remaining life. Actionably, people figure out what they need this year, what they want to take from Traditional, what they want to take from Taxable, then anything beyond that they then take out of Roth. If you've got room, you might even convert from Traditional to Roth up to the top of the tax-bracket that you're comfortable paying this year.

Kind of a very individual, in-depth analysis. Also probably best to err on the side of lowering taxes now vs. in the future for a lot of reasons, but post-retirement, you're looking at a life-time tax optimization problem.

[lefty]

In a Roth IRA, the tax savings at withdrawal come from optimizing your Roth / Traditional / Taxable withdrawals over your remaining lifetime.

The simplest comparison would be Traditional vs. Roth - if you take that marginal dollar from traditional, you'll pay your marginal income tax rate on it today. If you take it from Roth, you pay nothing. This has tax impacts both now and into the future.

So you estimate lifetime cash needs and tax implications and try to minimize over your remaining life. Actionably, people figure out what they need this year, what they want to take from Traditional, what they want to take from Taxable, then take anything beyond that that they then take out of Roth. If you've got room, you might even convert from Traditional to Roth up to the top of the tax-bracket that you're comfortable paying this year.

Kind of a very individual, in-depth analysis. Also probably best to err on the side of lowering taxes now vs. in the future for a lot of reasons, but post-retirement, you're looking at a life-time tax optimization problem.

Thank you.
Is there an order of what to sell when they "take from Roth" ?

[dandarc]

No, because there are no tax consequences when you make a qualified withdrawal from a Roth account ("Assume over 59.5  . . .").

I suppose if you're wanting growth and willing to change your asset allocation, then "sell bonds first" makes sense as a general rule.

[lefty]

No, because there are no tax consequences when you make a qualified withdrawal from a Roth account ("Assume over 59.5  . . .").

I suppose if you're wanting growth and willing to change your asset allocation, then "sell bonds first" makes sense as a general rule.

Thank you dandarc.
I am probably not asking my question correctly or you have answered my question and I don't understand it. Apologies.
My concern isn't about taxes (which there aren't any) when selling or the type of asset to be sold first.

For simplicity let me try a hypothetical example.

Current price of Fund A is $50 in 2024.

Fund A bought at $10 , 10 years ago.
Fund A bought at $20,  5 years ago.
Fund A bought at $30, 1 year ago.

I am wondering if there is some logic/strategy of which purchase price of Fund A I should sell first in order to maximize growth (so my stash grows faster or shrinks slower).
If the outcome in 10 years is the same no matter which purchase price I sell first, then I think my question is answered.

Sorry for trying everyone's patience here, I'm still learning. Thanks.

 



 

[seattlecyclone]

At this moment each share of Fund A is worth exactly the same, and this will be true forever. The shares are perfectly fungible. There is no advantage to selling your oldest shares first vs. selling the newest ones first.

[MustacheAndaHalf]

Some people approach retirement age with a "bond tent", which shifts more assets to bonds.  This helps mitigate sharp drops near retirement.  Once retired, you might sell bonds from your Roth IRA to increase the allocation to equities - which is the second half of the bond tent, slowly increasing stock allocation.

[dandarc]

OP - you don't seem to understand the basics of what a Roth IRA is - purchase price on the shares you hold within a Roth IRA does not matter within the account. At all.

https://jlcollinsnh.com/2015/06/02/stocks-part-viii-the-401k-403b-tsp-ira-roth-buckets/ is a reasonable place to start, and actually anyone investing in stocks at all should probably read the entire stock series.