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3 Roth IRAs; 3 Different Investment Strategies

May 07, 2021 10:00 AM ET13 Comments


  • With future tax policies unknown, it is wise to have a diversified set of accounts that help an investor be prepared for what might happen.
  • While a recent policy change reduced the usefulness provided by Roth accounts to inheritors, for investors they still have the potential to cut future tax bills.
  • This article will review each of our Roth accounts' investment strategy and the current holdings in each. Possible reallocations will also be covered.

Investing money for retirement
Photo by jygallery/E+ via Getty Images


Tax considerations related to investing sure would be easier if we knew what future tax policy would be. Current low income tax rates and exploding government spending points to higher rates coming making

This article was written by

Retired Investor profile picture

Retired Investor has been investing since the 1980s and has a background in data analysis and pension fund management. He writes articles to help others prepare for retirement by investing in CEFs, ETFs, BDCs, and REITs. He is a long only investor and shares strategies for trading options with a focus on cash-secured-puts.

He is a contributing author to the investing group Hoya Capital Income Builder. Hoya specializes in the portfolio management of publicly traded real estate securities and dividend ETFs. Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

We own each asset listed in the account summary listings.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (13)

FinancialDave profile picture
@Retired Investor,

Thanks for your shoutout for my Roth Conversions article. I must have missed it at the time.

Like your article.
Retired Investor profile picture
@FinancialDave I believe cross-referencing article benefits everyone so glad to do it, especially true for non-ticker subjects.
Retired Investor profile picture
Link to my IRA reviews: seekingalpha.com/...

Link to Taxable accounts review:seekingalpha.com/...

401k review is next
dimage54 profile picture
A great article as always. I haven’t done a Roth conversion yet as my wife and I just started collecting SSI. Plus due to selling options in all my taxable accounts too plus all the dividends I have to watch the tax man closely this year. Next year I’ll have a good handle on taxes and if I should convert.
Retired Investor profile picture
@dimage54 Thanks for sharing. Along with watching tax hit, one needs to avoid the next IRMMA limit two years prior to starting MC.
CNY profile picture
Regarding "...avoiding Medicare premium bumps comes into play for those over 63. Investors need to keep in mind the income used is from two years prior to when you or your spouse enrolls in Medicare. " I actually got caught by this; my Medicare deduction doubled (also for my wife). It was a big surprise but had a happy ending.

I set up a meeting at my downtown Social Security office to complain. Social Security services the Medicare premium deductions but relies on data from the IRS, and the handoff is slow - that's why it takes 2 years. But that's the "normal" procedure. If you had a recent drop in income (such as when you retire) they let you fill out a form that attests to your change in status and lets you provide your most recent income information directly. You can provide your most recent 1040 or, if that's not available yet just write down your best guess. They will adjust the Medicare deduction accordingly. If your guess was wrong they will adjust later when they get the correct data. In my case they also refunded the excess deductions that has already been taken. It was a surprisingly pleasant and cooperative meeting!
Retired Investor profile picture
@CNY Thanks for mentioning there is a “level event” form that allows one to appeal the MC premium bump. I thought I might need but the limits finally being inflation adjusted saved me.
@CNY I had a similar situation, but due to Covid, it was all mail interactions. They did adjust mine, and my wife's. However, they pushed my adjustment to the next year, and refused to refund the one year of overpayment on my account.
Retired Investor profile picture
@Dartz Thanks for sharing your experience. I knew there were rules where SS only will adjust back six months, like when a spouse dies and you want to switch over to their benefit.
This is a valuable contribution. I like that you talk about your financial plan as separate from your investment plan. And also the using different accounts for different strategies. I’m doing a similar thing to a lesser extent. My wife and I have 2 traditional IRAs each. One of hers is 70% small caps, and one of mine is 60% REITs. I also have a (very small) Roth, which is 100% growth. Our other accounts, including our taxable accounts, are more diverse.

As to ‘stable value’ plans in 401K’s, I rolled my 401K over into an IRA (the diverse one, also the largest), thinking that a short-term bond fund could take the place of the stable value fund. That might be true under more normal conditions, but not lately. However, I’m still keeping it as a more-or-less cash equivalent.

I’ve been holding off on Roth conversions (until next year at least) since I still have some residual income from my working days. I’m hoping I’m not missing that boat.
Retired Investor profile picture
@glinsight Thanks for reading. If I get good response, I will do follow up on our three IRAs. I based my conversions made so we stayed below the 24% bracket. I’m starting SS later this year so that will cut into how much we can convert.
mfposa profile picture
Thanks for being so transparent with your investments.

I have also thought about using a shorting fund to smooth results. You mentioned using DWSH. FYI, here's how DWSH did vs SH:

2021.... -11.9087
2020.... -25.0402
2019.... -22.0145
2018.... 4.8582

2021.... -21.9352
2020.... -49.9452
2019.... -25.267
2018.... 22.2806

I often wonder how Jim Chanos's short fund performs. Guess it doesn't matter as I'm sure I wouldn't be able to/want to buy into it. Not at the level he probably requires.
Retired Investor profile picture
@mfposa I plan on selling off some DWSH later this year to offset some gains I have taken this year. Very disappointed in how bad it has done sine the crash, down almost 80%!
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