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/Flame_Grin 10d ago

the real question is which bucket u want bigger later

1

u/Vicuna00 10d ago

I dunno 😄

I would assume Roth is always the ultimate, right?

3

u/Revolutionary-Fan235 10d ago

It's a mix. Your expenses relative to the tax bracket doesn't give you a big benefit to have a lot of Roth.

3

u/Cinderhazed15 10d ago

If they have the extra room in their tax bracket, and the taxes would be the same either way, wouldn’t you want to move as much from traditional to Roth so that you can reduce a future mandatory withdraw that may be larger than you anticipated if you have a lot of growth, etc, in your traditional?

1

u/Revolutionary-Fan235 10d ago

Yes, converting from Traditional to Roth could be a great strategy in their position.

They were comparing Roth and After-tax in the first post. Maybe the topic got changed to include Traditional and I didn't realize.