VIDEO: Tax Diversification in Retirement: How to Use 401(k), Roth IRA & Brokerage Accounts

How should you divide your retirement savings between a 401(k), Roth IRA, and brokerage account? The answer isn’t simply to save as much as possible in a tax-deferred account.

In this conversation, we discuss tax diversification in retirement and why having different types of accounts can give you more flexibility when it’s time to use your money.

We cover:

  • The three major tax categories: taxable, tax-deferred, and tax-free accounts 
  • Why maxing out a traditional 401(k) may not always be the best strategy
  • How tax-deferred withdrawals can affect your tax bracket and Medicare premiums
  • Why a Roth IRA can be a highly flexible retirement vehicle
  • The difference between Roth IRA contributions and investment growth 
  • How brokerage accounts can provide flexibility before age 59½
  • How to think about a retirement savings “pecking order”
  • Why your retirement goals should come before tax considerations
  • Why you shouldn’t automatically assume future tax rates will be higher
  • How having multiple “buckets” of money can create greater flexibility in retirement.

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This material is intended for educational purposes only. You should always consult a financial, tax, or legal professional familiar with your unique circumstances before making any financial decisions. Nothing in this material constitutes a solicitation for the sale or purchase of any securities. Any mentioned rates of return are historical or hypothetical in nature and are not a guarantee of future returns. Past performance does not guarantee future performance. Future returns may be lower or higher. Investments involve risk. Investment values will fluctuate with market conditions, and security positions, when sold, may be worth less or more than their original cost. Dorval & Chorne Financial Advisors is a registered investment adviser with the SEC. Registration of an investment adviser does not imply a certain level of skill or training.

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