Hi, my name is Dally M., and I'm a recovering tax-deferaholic

[gwendally]

I'm really struggling with tax deferred income right now.

Every piece of financial wisdom I have received through the years claims it is better to defer taxes on income. 
Better to pay the taxes later than now. 
Better to pay the taxes in retirement when you're in a lower bracket than now. 
Better to get tax deferred growth, giving a boost to the

Comments

[johnstricker]

[admnaismith]

Oh, good. I'm doing the right thing by always funding my Roth Ira to the maximum before investing a penny anywhere else.

[gwendally]

Yes. I think a Roth is the first thing to fund for EVERYONE. The ability to get it out in an emergency is well worth the loss of tax deferral.

However, we were already funding those to the maximum, partly because we use those for our kid's college savings accounts as well as emergency money.

[fitfool]

I would amend that strategy to first contributing enough to your 401k to get whatever company match you're eligible for. Then switch to maxing out a Roth IRA.

[gwendally]

He happens to be self-employed so I know his company doesn't match

[lds]

Agreed with johnstricker's #1, with the further addition that, if they can put higher taxes on tax-deferred investments, they can do it on anything else, too, including your property taxes, precious metals sales, anything. Not being able to plan wisely is just a symptom of periods of political and economic volatility we're experiencing right now. Most people, when they hear "diversification," think "mutual fund instead of individual stocks." That you're looking so much farther afield is something you should be proud of already.

Gads. Thinking new thoughts is HARD WORK!

Yeah, but recognizing the necessity for doing so and putting in the effort is hot! :) That's where most people fall back on just putting their blind faith in whatever was repeated to them most often in their youth. I make a hobby of collecting examples of this psychological bias, but wouldn't have expected to find it in tax advice. Thanks for showing me something new!

Trying to get this down to a Facebook status

[gwendally]

Is this the year to convert some of your Trad. IRA to a Roth? Time is running out: it has to be completed by 12/31. Deferring taxes to a year in which you're in a higher bracket is a bad plan!

Re: Trying to get this down to a Facebook status

[radven]

I am looking to convert my 401k to a Roth, but it looks like it will make more sense to do it next year. I've also realized 401k's are a bad bad idea.

Re: Trying to get this down to a Facebook status

[gwendally]

The best answer is usually to do it in stages over several years, making sure to convert only as much as will keep you in a low bracket in any given year.

Right now we can see two more years of low tax brackets, but I doubt they'll continue. Of course, congress can stay irrational longer than our country can stay solvent, so there's really no way to tell the future here.

[ernunnos]

Congratulations. Please don't tell your clients. I have a hard enough time finding krugerrands at a reasonable markup.