Traditional or Roth for the money you plan to put into real estate paper
I've got both a traditional rollover and a Roth sitting at the same custodian, and I have to pick which one funds the real estate side. The money is the same money. The wrapper isn't.
The traditional side is bigger because it never got taxed on the way in, so there's more capital to deploy today. More principal earning interest from day one is a real advantage and it compounds. Taxes come out at distribution, at whatever rates apply then, and I have no idea what those are.
The Roth side is smaller because I already paid the tax. Everything it earns after that grows without the tax coming back, and if the plan is long holds on paper that compounds for twenty years, that's where the arithmetic gets interesting. There's also no required distribution pressure on the Roth in the way there is on the traditional, which matters for illiquid assets you can't sell a slice of.
The counterargument I keep coming back to: putting the highest-growth assets in the Roth only pays off if those assets actually grow the most. If a note book yields steady single digits and my public market holdings do better, I've put the wrong thing in the wrong wrapper.
Which account funds your real estate, and did you decide that on purpose? Anything about the tax treatment of your own accounts is a conversation for your CPA, not a forum poll, but I want to know how people reasoned about it.
Which wrapper do you use for the real estate portion of your retirement capital?
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