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rated:
http://whitecoatinvestor.com/iras-rmds-and-the-crisis-of-doctors... 

I know that FWF is not my blog nor my reddit account but sharing this good article at the risk of getting reds.

Here is my summary (with some paraphrasing and some comments)

  • Physicians (and many high savers) can face large RMDs in retirement.  It is an income they don't need but are forced to take RMD and pay taxes on it.  One way to avoid it is to do Roth Conversion AFTER you retire but before RMDs begin. You don't convert the full amount.  You convert only enough to bring you to the top of a tax bracket you are comfortable with.
  • Reconsider making Trad IRA contributions in your lean years in the beginning of your career.  Contributions made when you were in 20% bracket may not look smart when RMDs hit.
  • There was a thought experiment about a tax shelter which loosely goes like this:  Twenty one (or more) like minded folks facing RMDs start a company.  They put up less than 5% of the capital (to avoid being 5% owners).  They become employees.  The company starts a 401k plan that allows you to roll over your IRAs. And voila - you can skip RMDs !

The comments on the article are also very informative.  
PS:  As usual, some Whole Life salesman piled in with useless arguments about WLI benefits. He got skewered. 

Edit:  Added clarification to the point about Roth conversion.

Member Summary
Most Recent Posts
True, but you're also drawing down your after-tax non-IRA accounts early on, so you have less dividends/interest by age ... (more)

canoeguy1 (Jan. 04, 2017 @ 10:29a) |

Actually, if you assume the tax rate remains the same over time, then mathematically there is no difference between inve... (more)

canoeguy1 (Jan. 04, 2017 @ 10:37a) |

The results are exactly the same if you assume a limited amount of funds...e.g.  if in 15% bracket, 1000 to TIRA and 850... (more)

kaneohe (Jan. 04, 2017 @ 10:49a) |

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rated:
Yeah, one way to avoid RMDs (aside from having your retirement money in a Roth IRA), is to still be working at a company with a 401k and move all your retirement assets into that plan.  That only works as long as you keep working, and as long as you aren't an owner.  It may be easier to arrange than starting a custom company with >20 others, however.  Usually you're an expert in your career by the time you're retiring with enough money that you don't want your RMDs - it might not be hard to work part time in your industry and get that access their 401k plan as an added benefit.

rated:
I did my Roth conversion years ago, back when the IRS offered that "spread it over four years" deal.  I'm not 100% certain what I did was a smart financial move, but it does simplify one's life as you become older.  My Roth is most likely to outlive me, and I don't have to mess with it each year.

Doing a Roth conversion now, to avoid the RMDs?  I dunno.  That could be rather expensive, especially with Trump raising income taxes for some individuals (contrary to what you hear).  You need some sort of spreading option to avoid being shoved into the higher, very punitive, tax brackets.

rated:
shinobi1 said:   You need some sort of spreading option to avoid being shoved into the higher, very punitive, tax brackets.
You should do partial conversion ...just enough to bring you to the top of a bracket you are comfortable with.

rated:
Just take the money out of your account at regular intervals, like it's income from working.

Is the reason why you saved in an IRA/401k is to be the richest person in the cemetery or to have a comfortable retirement? It's a tax deferred account, and that's what happens.

rated:
Moving money into a Roth during retirement is no different than taking an RMD ahead of time. Why would that help you, unless your tax bracket decreases later in retirement?

Most likely, if you have so much money that RMD's put you in a high tax bracket, you probably also have lots of after-tax savings.
Those savings would, by themselves, put you in a high tax bracket, and doing a Roth conversion would therefore be futile.

Here's some better options: Gift a bunch of after-tax savings to your kids/grandkids or put it in a trust for them. That will solve your tax problem too, since the interest/dividends will now go to your kids, and not you. Charitable contributions are another way. It not only lowers the amount of after-tax money that you get interest/dividends on, but the donation itself lowers your taxes.

Of course, if you just want to keep it all for yourself, than just pay the taxes and enjoy life. Stop worrying about every cent. You only have a few years left.

rated:
Trump could help

rated:
Am I missing something here? Aren't Roth withdrawals tax free as long as you've reached fhe minimum age?

rated:
Yes - distributions from Roth are tax free after minimum age.
We are talking about RMDs from tax-deferred accounts. They are taxable.

Once RMDs begin, you may be in high tax bracket (say 25%) depending on the size of your non-Roth nest egg.

To avoid those taxes, you can do gradual Trad-to-Roth conversions after you retire but before RMDs begin.
In that period, you will have very little income (except dividends). So you should be in a lower tax bracket (say 15%)

rated:
rpi1967 said:   Trump could help
  
Plz expand...

rated:
ssgcinty said:   Yes - distributions from Roth are tax free after minimum age.
We are talking about RMDs from tax-deferred accounts. They are taxable.

Once RMDs begin, you may be in high tax bracket (say 25%) depending on the size of your non-Roth nest egg.

To avoid those taxes, you can do gradual Trad-to-Roth conversions after you retire but before RMDs begin.
In that period, you will have very little income (except dividends). So you should be in a lower tax bracket (say 15%)

 Got it.  

rated:
ssgcinty said:   
To avoid those taxes, you can do gradual Trad-to-Roth conversions after you retire but before RMDs begin.
In that period, you will have very little income (except dividends). So you should be in a lower tax bracket (say 15%)

  
Is that a good strategy for someone in their 40s but has a significant amount of Trad IRAs?

What about keep adding to Trad IRAs  then convert prior to RMDs while staying the 15% bracket..


 

rated:
It's a pretty good strategy if you have fluctuating income. Do the conversions in years that you make very little and the marginal rate is low.

rated:
from the editorial discussion of this article: "First, it is important to realize that the issue discussed in this post is one that very few people, including physicians, will ever have to deal with". If it doesn't even apply to most doctors, it will apply to even less of a percentage of most people.


this is a problem only if you have a pretty good sized amount of savings and other retirement income, and also have enough of a window of opportunity between retirement and age 70 to do a lot of roth conversions. interesting concept, not sure how many people will take advantage of it.

rated:
ssgcinty said:   Yes - distributions from Roth are tax free after minimum age.
We are talking about RMDs from tax-deferred accounts. They are taxable.

Once RMDs begin, you may be in high tax bracket (say 25%) depending on the size of your non-Roth nest egg.

To avoid those taxes, you can do gradual Trad-to-Roth conversions after you retire but before RMDs begin.
In that period, you will have very little income (except dividends). So you should be in a lower tax bracket (say 15%)

  This only works for people who have little taxable income between retirement and age 70, and then, for some unexplicable reason, suddenly have a high taxable income.
If your taxable income is the same, (or more likely, dropping, as you use up your after-tax nest egg) throughout your retirement years, then doing Roth conversions is the same as starting RMD's early. It means paying taxes earlier than necessary. I just don't see any value in that.

rated:
rpi1967 said:   Trump could help
  Yes definitely.*




*Minimum required amount $10,000,000 USD.

rated:
canoeguy1 said:   It means paying taxes earlier than necessary. I just don't see any value in that.

Paying the taxes early at a lower rate is better than paying the taxes at a higher rate in the future.
  

rated:
canoeguy1 said:   
ssgcinty said:   Yes - distributions from Roth are tax free after minimum age.
We are talking about RMDs from tax-deferred accounts. They are taxable.

Once RMDs begin, you may be in high tax bracket (say 25%) depending on the size of your non-Roth nest egg.

To avoid those taxes, you can do gradual Trad-to-Roth conversions after you retire but before RMDs begin.
In that period, you will have very little income (except dividends). So you should be in a lower tax bracket (say 15%)

  This only works for people who.....for some unexplicable reason, suddenly have a high taxable income.

  There is nothing inexplicable - RMD is the reason why the income will jump up after 70.
 

rated:
Chyvan said:   
canoeguy1 said:   It means paying taxes earlier than necessary. I just don't see any value in that.

Paying the taxes early at a lower rate is better than paying the taxes at a higher rate in the future.
  

  
Not if tax rates are ever changingg due to political winds/income fluctuation (see Trump post above)

rated:
needhelpplease said:   Not if tax rates are ever changingg due to political winds/income fluctuation (see Trump post above)

I qualified the statement with "lower" and "higher." If you have a crystal ball to predict your future rate, then great. However, if you have to guess based on your income which bracket that you might be in, then you probably want to take the money early when your income is low rather than delaying to a year where your income will be higher.

rated:
The money wasn't taxed so this isn't some serious problem. The hope with tax deferral is always that you later can withdraw at a lower rate. Having so much money that this isn't possible is a good problem to have.

Still sure Roth convert if and when it makes sense.

rated:
right, this applies to those lucky enough to 1) retire years before 68-ish when you should be taking social security so you'll have some years with low income to convert roth and 2) have a significant enough tax deferred amount that the difference in taxes is worth it and that 3) you'll have a significant income in age 70 to put you in a high tax bracket.

we should all be so lucky...which is why even the article said it wouldn't apply to too many people.

rated:
Chyvan said:   
needhelpplease said:   Not if tax rates are ever changingg due to political winds/income fluctuation (see Trump post above)

I qualified the statement with "lower" and "higher." If you have a crystal ball to predict your future rate, then great. However, if you have to guess based on your income which bracket that you might be in, then you probably want to take the money early when your income is low rather than delaying to a year where your income will be higher.

  
You know your tax rate for  a given year at the end . If it's 0-15% then convert to Roth. If not take chances in the future and convert after retirement but before 70.

rated:
needhelpplease said:   You know your tax rate for  a given year at the end . If it's 0-15% then convert to Roth. If not take chances in the future and convert after retirement but before 70.
  
Stop with your inconsistencies. You just said you can't know that because of political winds and income fluctuations. Your post just confirmed what I already said: lower is better than higher regardless of when you pay it.

rated:
needhelpplease said:   
ssgcinty said:   
To avoid those taxes, you can do gradual Trad-to-Roth conversions after you retire but before RMDs begin.
In that period, you will have very little income (except dividends). So you should be in a lower tax bracket (say 15%)

  
Is that a good strategy for someone in their 40s but has a significant amount of Trad IRAs?
What about keep adding to Trad IRAs  then convert prior to RMDs while staying the 15% bracket..
 

  For someone in 40s, I would keep building the Trad-IRA.  I would never advocate executing the strategy now.  It would be safer to wait till retirement.

  The beauty of Roth is tax-free withdrawals.  Thirty years from now, the trillions in Roth would be a very attractive Target for politicians.  Can you imagine the chorus to tax the billions that people are getting tax-free?  Should they not be made to pay their fair share?

  If you think the country won't renege on the promises, consider that the Social security income was not taxed for the first 46 years until the Reagan era.

rated:
ssgcinty said:   
needhelpplease said:   
ssgcinty said:   
To avoid those taxes, you can do gradual Trad-to-Roth conversions after you retire but before RMDs begin.
In that period, you will have very little income (except dividends). So you should be in a lower tax bracket (say 15%)

  
Is that a good strategy for someone in their 40s but has a significant amount of Trad IRAs?
What about keep adding to Trad IRAs  then convert prior to RMDs while staying the 15% bracket..

  For someone in 40s, I would keep building the Trad-IRA.  I would never advocate executing the strategy now.  It would be safer to wait till retirement.

  The beauty of Roth is tax-free withdrawals.  Thirty years from now, the trillions in Roth would be a very attractive Target for politicians.  Can you imagine the chorus to tax the billions that people are getting tax-free?  Should they not be made to pay their fair share?

  If you think the country won't renege on the promises, consider that the Social security income was not taxed for the first 46 years until the Reagan era.

  The contributions aren't tax-free. I already paid my taxes on them.

rated:
Try to explain that to the lynch mob 30 years down the road.

rated:
TravelerMSY said:   Am I missing something here? Aren't Roth withdrawals tax free as long as you've reached fhe minimum age?
  They are at the present time...

rated:
needhelpplease said:   
ssgcinty said:   
To avoid those taxes, you can do gradual Trad-to-Roth conversions after you retire but before RMDs begin.
In that period, you will have very little income (except dividends). So you should be in a lower tax bracket (say 15%)

  
Is that a good strategy for someone in their 40s but has a significant amount of Trad IRAs?

What about keep adding to Trad IRAs  then convert prior to RMDs while staying the 15% bracket..


 

  I assume "keep adding to Trad IRAs" means "keep contributing to Trad IRAs" and leave that contribution in the Trad IRAs. Unless your income is low enough that the contribution to a Trad IRA reduces your AGI, that's a bad strategy under current tax laws.  While there is an income limit to contribute to a ROTH IRA, there is no income limit to convert.  You can make your annual contribution to a traditonal IRA, and a couple days later convert that amount to a ROTH IRA, without any income restrictions, and with the government promise, for what that's worth, that all earnings will be tax free. 

rated:
ssgcinty said:   Try to explain that to the lynch mob 30 years down the road.
  Riiiight. 
You may as well assume that the government will simply confiscate all your savings.
Two things to condsider:
1) The principal money in the ROth was ALREADY taxed. Only the earnings were not. If you assume that the government will tax the Roth, why not assume that it will just tax all your savings, or just take them?
2) You can withdraw the contributions from your Roth at any time, with no penalty. If anything like this were to happen, people would simply withdraw their principal before it went into effect. If they're over age 591/2, they could do the same with the earnings. If they're younger, they just pay the 10% penalty®ular taxes. Your money is NOT locked up in a Roth.
3) The Sky is not falling. Nobody is out to get you.

rated:
When the Social Security taxes were introduced, SS payments were supposed to be tax free because your SS contributions (actually just half of it) are already taxed.
Fast forward 46 years - all SS payments were made taxable (not just half).

I am not claiming Sky is falling. I was just responding to cows123 who asked if it is a good strategy for someone in their 40s.
My answer is No.
If I am that far from retirement, I would not lay a large bet on tax laws 30 years down the road.
But if I am already in my 60s and have little income, then it is a bet worth making.

rated:
ssgcinty said:   
canoeguy1 said:   
ssgcinty said:   Yes - distributions from Roth are tax free after minimum age.
We are talking about RMDs from tax-deferred accounts. They are taxable.

Once RMDs begin, you may be in high tax bracket (say 25%) depending on the size of your non-Roth nest egg.

To avoid those taxes, you can do gradual Trad-to-Roth conversions after you retire but before RMDs begin.
In that period, you will have very little income (except dividends). So you should be in a lower tax bracket (say 15%)

  This only works for people who.....for some unexplicable reason, suddenly have a high taxable income.

  There is nothing inexplicable - RMD is the reason why the income will jump up after 70.

  
If your  income is $200K at 60, and $200K at 71, the only difference at age 71 is the RMD, correct?

Let's assume an RMD of $4K per year on a $100K Trad IRA account (approx based on IRS rules).
That makes your income at age 71 $204K.

So, if you convert any MORE than $4K per year to a Roth, you're actually raising your income at age 60 to ABOVE the level at age 70.
So you're not only paying taxes in advance, you're actually paying more since you're then in a higher tax bracket (according to your assumption).

If you convert less than $4K, it hardly makes a difference to your RMD.

Assume, for example, you convert $2K  per year. starting at age 60.
That means you pay taxes on those $2K several decades ahead of when you need to, and you are STILL left with $80K in the Trad IRA account at age 70, on which you have to take an RMD of $3.2K.
So, your income at age 71 is $203.2K, instead of $204K.

That decade of conversions and prepaying taxes on $20K of IRA money only lowered your Age 71 income by $800.
I doubt that makes any difference at all to your tax bracket, even if you multiply the above numbers by a factor of 3 or 4. The higher tax brackets are tens to hundreds of thousands of dollars apart, not a few hundred dollars.

But, let's assume, that by crazy coincidence, the higher tax bracket kicks in right at $203.2K. Then you save approx 5% (the difference in the tax bracket rates) of $800 by following this strategy. That's a full $40 per year! Wow!
Remember, though, that to save that $40/year, you had to prepay taxes on $20,000, several decades ahead of time. All that lost earnings power...certainly more than $40!!

If you're rich, and make $1M instead of $200K, everything is in the highest bracket anyway, so none of this has value.

I fail to see who this strategy would be useful for.
 

rated:
The whole rationale for having tax-advantaged retirement savings is so that people can fund their living costs in retirement.

rated:
   My premise is that someone who retires at 60 won't have an 100k income between 60 and 70.  Here is what I had said earlier.
ssgcinty said:   In that period, you will have very little income (except dividends). So you should be in a lower tax bracket (say 15%)
  In that period, if current laws prevail, it may be advantageous to convert some money into Roth (say 37k a year) .


 

rated:
ssgcinty said:      My premise is that someone who retires at 60 won't have an 100k income between 60 and 70.  Here is what I had said earlier.
ssgcinty said:   In that period, you will have very little income (except dividends). So you should be in a lower tax bracket (say 15%)
  In that period, if current laws prevail, it may be advantageous to convert some money into Roth (say 37k a year) .


 

  You missed the point.
Let's use your example.
Converting your entire Trad IRA into a Roth at $37K a year for a decade, means you started with a $370K Trad IRA.

Let's assume a low dividend income of $30K/year.
That means, from 60 to 70, you would now pay taxes on an income of $67K a year, instead of $30K/year.

At age 70, your income drops back down to $30K a year, as your entire Trad IRA was converted.

Why would you do that? You purposely put yourself in a high tax bracket from 60-70, just to prevent the minimal RMD's at age 71.


A far better plan would be to do no conversion and pay tax on $30k/yr till age 70. Tthen you take the RMD's of $14.8K and pay tax on the resultant $44.8K of income at age 71.

Why? Because your taxable income is lower each year. It's max $44.8K instead of $67K.

rated:
How about this.........retire at 60 w/ 30K QDIV income, do partial conversions of 18K/ yr to stay in 15% bracket where QDIVs are not taxed.   This reduces RMDs but does not eliminate them.
Delay 20K SS until 70.     Prior to 70, tax is 768( 613 after age 65).     After 70, tax is 1920 w/ conversions.       If no conversions, tax would be 4363.       
 

rated:
Chyvan said:   
canoeguy1 said:   It means paying taxes earlier than necessary. I just don't see any value in that.

Paying the taxes early at a lower rate is better than paying the taxes at a higher rate in the future.
  

I think people are not paying enough attention to that point.  By the time you retire, most of the money in the IRA comes from appreciation and dividends which are taxed at preferential rates.  But withdrawals from IRA are ALL taxed at Ordinary income tax rates -- including amounts from capital gains & dividends.  The difference can be quite substantial.  Basically the first $35/70K of LTCG/dividends are taxed at 0%. 

If you simply compare the amounts in your none-deferred account and a traditional IRA account, you would be comparing a post-taxed amount vs a pre-taxed amounts.  Has anyone done a spreadsheet to see what the after-tax amount (at Ordinary income tax rate) of a TIRA would be  vs a non-deferred account?
   

rated:
canoeguy1 said:   ssgcinty said:      My premise is that someone who retires at 60 won't have an 100k income between 60 and 70.  Here is what I had said earlier.
ssgcinty said:   In that period, you will have very little income (except dividends). So you should be in a lower tax bracket (say 15%)
  In that period, if current laws prevail, it may be advantageous to convert some money into Roth (say 37k a year) .


 

  You missed the point.
Let's use your example.
Converting your entire Trad IRA into a Roth at $37K a year for a decade, means you started with a $370K Trad IRA.

Let's assume a low dividend income of $30K/year.
That means, from 60 to 70, you would now pay taxes on an income of $67K a year, instead of $30K/year.

At age 70, your income drops back down to $30K a year, as your entire Trad IRA was converted.

Why would you do that? You purposely put yourself in a high tax bracket from 60-70, just to prevent the minimal RMD's at age 71.


A far better plan would be to do no conversion and pay tax on $30k/yr till age 70. Tthen you take the RMD's of $14.8K and pay tax on the resultant $44.8K of income at age 71.

Why? Because your taxable income is lower each year. It's max $44.8K instead of $67K.


I think you're missing the part of the plan where you defer social security to 70. Every year you defer results in an increase by 8 percent of your monthly SS check. So you make less income from 62 to 70 leaving room to do Roth conversions up to the 15 percent bracket or 28 if you have a lot of money sitting in traditional IRAs

rated:
confused200 said:   
Chyvan said:   
canoeguy1 said:   It means paying taxes earlier than necessary. I just don't see any value in that.

Paying the taxes early at a lower rate is better than paying the taxes at a higher rate in the future.
  

I think people are not paying enough attention to that point.  By the time you retire, most of the money in the IRA comes from appreciation and dividends which are taxed at preferential rates.  But withdrawals from IRA are ALL taxed at Ordinary income tax rates -- including amounts from capital gains & dividends.  The difference can be quite substantial.  Basically the first $35/70K of LTCG/dividends are taxed at 0%. 

If you simply compare the amounts in your none-deferred account and a traditional IRA account, you would be comparing a post-taxed amount vs a pre-taxed amounts.  Has anyone done a spreadsheet to see what the after-tax amount (at Ordinary income tax rate) of a TIRA would be  vs a non-deferred account?
   

  Not a spreadsheet but just a simple conceptual model: assumption is that you know the tax rates in early retirement and later retirement .....here assume 15% in early retirement before RMDs/15% in later retirement after RMDs.    Compare 2 cases:
1) 100K in TIRA, 15K in taxable side fund......do a Roth conversion ; use 15K side fund to pay conversion tax leaving 100K in Roth.
After some period of time Roth is worth N x original value, say 200K.    Aftertax value of 200K.
2) 100K in TIRA, 15K in taxable side fund.     Leave alone.   After some period of time, TIRA is worth 200K.    Taxable side fund is worth 30K-  (- because of possible tax drag on distributions; might be small
in 15% bracket.     Tax on TIRA is 30K leaving aftertax value of 170K.   Taxable side account is worth 30K- (0% LTCG in 15% bracket).     

The values of the 2 cases is similar after tax .......200K with perhaps a slight edge to the Roth.    Clearly, though, if tax rate in late retirement is higher, then conversion to Roth is better.    The key to this
is knowing if/that the assumptions of tax rate in early/late retirement are correct.     Conclusion is only as good as the assumptions.
 

Skipping 4 Messages...
rated:
canoeguy1 said:   
kaneohe said:   
confused200 said:   
Chyvan said:   
canoeguy1 said:   It means paying taxes earlier than necessary. I just don't see any value in that.

Paying the taxes early at a lower rate is better than paying the taxes at a higher rate in the future.
  

I think people are not paying enough attention to that point.  By the time you retire, most of the money in the IRA comes from appreciation and dividends which are taxed at preferential rates.  But withdrawals from IRA are ALL taxed at Ordinary income tax rates -- including amounts from capital gains & dividends.  The difference can be quite substantial.  Basically the first $35/70K of LTCG/dividends are taxed at 0%. 

If you simply compare the amounts in your none-deferred account and a traditional IRA account, you would be comparing a post-taxed amount vs a pre-taxed amounts.  Has anyone done a spreadsheet to see what the after-tax amount (at Ordinary income tax rate) of a TIRA would be  vs a non-deferred account?
   

  Not a spreadsheet but just a simple conceptual model: assumption is that you know the tax rates in early retirement and later retirement .....here assume 15% in early retirement before RMDs/15% in later retirement after RMDs.    Compare 2 cases:
1) 100K in TIRA, 15K in taxable side fund......do a Roth conversion ; use 15K side fund to pay conversion tax leaving 100K in Roth.
After some period of time Roth is worth N x original value, say 200K.    Aftertax value of 200K.
2) 100K in TIRA, 15K in taxable side fund.     Leave alone.   After some period of time, TIRA is worth 200K.    Taxable side fund is worth 30K-  (- because of possible tax drag on distributions; might be small
in 15% bracket.     Tax on TIRA is 30K leaving aftertax value of 170K.   Taxable side account is worth 30K- (0% LTCG in 15% bracket).     

The values of the 2 cases is similar after tax .......200K with perhaps a slight edge to the Roth.    Clearly, though, if tax rate in late retirement is higher, then conversion to Roth is better.    The key to this
is knowing if/that the assumptions of tax rate in early/late retirement are correct.     Conclusion is only as good as the assumptions.


  Actually, if you assume the tax rate remains the same over time, then mathematically there is no difference between investing in a Roth or a TIRA. Your after-tax result will be exactly the same after cashing out. That holds true whatever age group you use, and would also hold for Roth conversions. If you don't believe it, set up a spreadsheet and see.

Choosing one over the other depends on whether you think you will be in a higher or lower tax bracket upon cashing out, and whether or not cashing out your TIRA would cause you to lose deductions at that time (or put you into a higher Medicare payment bracket for example)


 

 The results are exactly the same if you assume a limited amount of funds...e.g.  if in 15% bracket, 1000 to TIRA and 850 to Roth.    However if you have other funds to saturate the Roth, then you have
1000 in TIRA and 150 in taxable side fund vs 1000 in Roth.   Then, as in the example previously given, Roth >= TIRA depending on tax drag of taxable account, which may be very small to 0 if in 15% bracket with 0% LTCG/QDIV (STCG/non qual dividends spoil it here) but the effect is more significant if you are in the 25% bracket (15% CG/QDIV).    

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