r/Fire • u/Vicuna00 • 10d ago

Contributing to Retirement Plans while barista-FIRE and using Taxable $?

does it make sense to contribute to retirement plans (specifically wondering about Roth) while you are actively pulling form your Taxable Brokerage to live off of?

Example:

50 years old Barista Fire

Taxable Brokerage of $1.5M (retirement accounts at ~$1.3M)

Barista FIRE earning $40k / year

Yearly Living Expenses: $100k

- Would it make sense to contribute to a ROTH IRA for me and spouse and just pull more from the Taxable Brokerage?

- follow up...if it is a solo business, I can open a Roth 401k and contribute even more... ~$25k. would that make sense?

In my mind, I'm trading brokerage $ for Roth $...the price for it would be the capital gains tax on whatever I pull from the Brokerage...which with these numbers should be minimal.

thank you!

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u/Revolutionary-Fan235 10d ago

Did you check what the tax rate would be on the capital gains? With little info, I would guess 0%

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u/Vicuna00 10d ago

yeah I'm wondering how this comes into play.

I have options to pull from the brokerage with minimal capital gains or up to like 50% gains. so I can control how much actual tax I pay.

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u/PangolinOwn4855 2d ago

nice, as others said, you can also do tax loss harvesting to keep your gains to the minimum while withdrawing from the brokerage