Where to invest for taxable retirement savings?

[disneysteve]

We are no longer eligible to contribute to our Roths. We've always maxed them, so $13,000/year since we're both over 50. I still want to be putting that money away but I'll need to do it in a taxable account. I'm already maxing out my 401k. And I don't want to do a backdoor Roth.

What investment(s) would you use in that situation? I'm thinking of going with ETFs since they are more tax-efficient than mutual funds and many can be purchased commission-free today.

Any other suggestions? No, I don't want to invest in real estate.

[corn18]

Tax efficiency is important in a taxable account. (duh!) I keep my international stock index and total US market index funds in my taxable account. I use mutual funds, but ETF's are fine, too. The difference is personal preference. These funds spin off minimal capital gains and most of the dividends are qualified so taxed at the cap gains rate vs. income rate.

As a result of keeping almost all equities in my taxable, my 401k carries almost all bonds. That keeps my AA at 60/40. I also keep $25k in a muni bond fund in my taxable. I would use that to buy equities as I rebalance or during a market crash.

[sblatner]

We have extra money to invest and want to be tax efficient. We put it in Vanguard Tax-Managed Capital Appreciation Fund.

[Singuy]

Be aware that tax rate decreased pretty dramatically especially for married couples for 2018. Muni bonds are tax free but has pretty lame yields which may not be worth it this year vs higher yielding index funds.

[corn18]

Be aware that tax rate decreased pretty dramatically especially for married couples for 2018. Muni bonds are tax free but has pretty lame yields which may not be worth it this year vs higher yielding index funds.

Agree. I'm in the 35% tax bracket, so I keep them. They are yielding 3%, so that works fine for me.

[Jluke]

VTI - low ER. 3% turnover rate
ITOT - low ER. 8% turnover rate

Tax exempt fund of some sort (state specific or other)

I bonds?

Fixed income - CDs

My taxable is going towards VTI and sometimes BRKB. And extra to the mortgage counts too I guess.

[kork13]

I understand that you don't want to do a backdoor Roth, but I can't really see why not... It's not like you would be paying more taxes on the Roth than with taxable investments. And you could transfer the cash from the non-deductible IRA to a Roth IRA within a few weeks of contribution, so you'd have minimal gains/losses to worry about.

If the concern is the tax implications of some deductible IRAs you have, have you considered rolling those into your Urgent Care's 401k that you now have available to you? That would allow you to avoid the pro-rata rule (it only applies to monies in pre-tax IRAs).

I'm sure there's a factor or three I'm not aware of in your situation, but I personally think that the backdoor Roth is still a great option for you, and definitely more advantageous than a taxable account.

With that said.... Earning your way out of Roth IRA contributions is not a bad problem to have.

[disneysteve]

kork, I actually haven’t looked into the backdoor Roth details yet. I will but for the purposes of this thread was looking for other suggestions.

[moneybags]

Are you able to contribute to an HSA? It's my favorite retirement savings tool.

[disneysteve]

Are you able to contribute to an HSA? It's my favorite retirement savings tool.

No. I had one at my old job but not now. That is fine by me though because my coverage is far better and my premium is way lower. I’m happy to lose the HSA for that.

[bjl584]

Paying some taxes aren't necessary a bad thing. Sounds like you are in a position to take advantage of some good investment opportunities.

How much do you owe on your mortgage? I think that is your one and only debt? Maybe get rid of that?

Do you want to stick to more traditional investments (stock market)?

If so inclined you could probably invest elsewhere with the extra cash and potentially pick up some tax savings and write offs on the back end.

[Like2Plan]

Does your 401k allow after tax contributions?

[disneysteve]

How much do you owe on your mortgage? I think that is your one and only debt? Maybe get rid of that?

We owe just under 25K. Starting this month or next at the latest, I'm going to add $1,000/month to the payment and have it paid off next September if not sooner.

[disneysteve]

Does your 401k allow after tax contributions?

I don't know. I'll have to find out.

[Singuy]

What is the interest rate on your mortgage? Your mortgage interest+property tax will be way below your standard deduction so you get zero benefit from them when it comes to tax deductions. If the interest rate is 4% then might as well pay it off. That's 4% post tax return if you want to think about it that way.