Apologies if this has been answered before, feel free to reply with a link to an earlier thread if so!
Here's my situation:
Gross Income: ~115k, varies a bit with bonus
Max 401k, company matches 8%
Max HSA
Started funding vanguard taxable account this year, just hit threshold for admiral shares this month.
Looking ahead, I'm trying to decide whether its worth it to fund a Roth IRA before putting more into taxable. I'm currently under the limit, and will be getting married next year to a partner who makes significantly less, so we should be under the MFJ limit for at least a few more years. Heres how I'm thinking:
Taxable
-Contributions are already taxed
-Unrealized gains are not taxed
-Qualified dividends are taxed, but at a lower rate than income
-long term realized gains taxed at lower rate than income
Roth
-Contributions are already taxed
-Dividends are tax deferred, untaxed if withdrawn after 59.5
-gains are tax deferred, untaxed if withdrawn after 59.5
In either case the contributions can be withdrawn at any time with no tax (although with taxable you cannot neatly separate contributions from gains, so any withdrawal will have tax implications). So the difference is in the earnings. If I expect to not need the earnings before 59.5, Roth clearly wins. But if I expect my later years to be fully funded through 401k and HSA dollars, it seems like I'm better off paying LTCG tax on my taxable earnings than income tax + penalty on Roth earnings.
Does this sound right?