Now that I have little income after retiring, I’m thinking about ditching Roth IRA contributions (and actually withdrawing all my basis in Roth IRAs) to iinvest the money in “taxable” investments instead.
I was hoping to get the smart fatwallet/fragiledeal minds to double check my understandings first:
For people in the 10/12% tax brackets, my understanding of comparing roth vs taxable goes like this:
Income used to fund: both taxed at 10/12%.
While growing before needed: the Roth dividends/capgains are tax-exempt, taxable account dividends/capgains are “taxable” but rate is 0% lt capgains rate
Access <59.5: Roth is tax-free for basis but gains are taxable + 10% penalty. Entire taxable sale would be at 0% capgains rate
Access >59.5: Roth is tax-free, again entire taxable sale would be at 0% capgains rate
So the only difference for those with low income is that Roth earnings are taxed more if withdrawn < 59.5, otherwise they are equivalent? And maybe losing the savers credit (which I’ll lose for 3 years anyway after withdrawing the existing Roth basis)
Or am I completely missing something?