TorchtheFlyingTiger

Every brokerage I've ever used offers custodial Roth even RH.

If still working most will find themselves in same or lower bracket in retirement and better off waiting to convert unless only in 12% bracket and already maxing all Roth accounts and HSA. That's a rare case since few in 12% are maxing all post tax retirement contributions.

If it was simple, we wouldn't have the lamest hobby to keep busy in early retirement :cheers:

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Only use these accounts if you get the free 1k and don’t add to it. These accounts are set up badly for returns

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You're right, fhey're not the most efficient since they are funded with post tax contributions then treated as a traditional IRA (taxed at income tax rates instead of lower LTCG rate). Thus, you're paying income tax rate twice. There may be another compelling limited use case to seed Roth conversions especially for older teens as they wouldnt face many years of growth before converting.

Since OP's kid has income I'd fund Roth first. I plan to give a match when mine start working. Several multiples just to make sure they max Roth each year.

I set mine up at 13 with a youth brokerage they can invest in and use for spending on debit card. Will open Roth as soon as they have earned income.

I'd have to sell appreciated assets and pay LTCG to reallocate into cash equivalents.
Cash equivalents would pay interest/dividends further increasing income taxes and reducing my already narrow space in 12% bracket for most efficient Roth conversions.
Approaching 50 so we have a long term investing horizon and pension covers primary expenses & current lifestyle so we can take on risk and wait out market decline.
Rate risk is a concern but was supposedly taken into account in the scenario I ran through AI.
(Maybe I could mitigate by paying interest as it accrues if rate exceeds 6-7%)

Still thinking through this strategy and will require much more analysis before I act. Please keep asking ? and poking holes really helps to look at it from every angle.

I won't pay back SBLOC, our heirs will. If I do this, my plan is to just let the SBLOC interest accrue. Heirs will pay it off from taxable portfolio (which will almost certainly be larger than if I had been selling shares to spend along way). Heirs get full step up in basis so no LTCG when they sell shares to cover the debt.

Same for spouse since she gets 50% of assets stepped up. I've told her to go ahead and pay it off at my death since she loses my pension will need to take less risk.

Running various scenarios through AI and Monte Carlo, it seems to have an extremely low failure rate especially as I add guardrails etc.

Defining success as ending portfolio value (minus debt) remains above $1m after 10 year horizon (until I can tap IRAs normally)
-Only taking $35k (plus inflation adjust)
- Add guardrail of no withdrawals any year market is 15% below all time high
There is almost zero chance of margin call and ending portfolio is higher in most scenarios than simply selling shares to reap $35k post tax.

I dont talk enough with the neighbors I really like and.occasionally hang out with to know that much about their family issues,.who they hate etc. Why are you interacting so often?

I can pay cash. I just prefer to keep my assets fully invested and not realize LTCG tax when the plan is to pass most of those assets to heirs with stepped up basis tax free.

Dave is great for financial discipline (and helped us reinforce good habits) but I've progressed beyond the zero debt dogma. Besides, Dave would tell me with a straight face and utter conviction that I could confidently spend 8% of my retirement savings annually in perpetuity. (Zero awareness of sequence of returns risk)

At what portfolio size does buy, borrow, die become feasible strategy for everyday millionaires or is it just for the ultra wealthy?
I'm exploring idea of borrowing against taxable brokerage to augment fun spending and/or pay tax on Roth conversions. (Primary expenses and current comfortable lifestyle fully covered w pension and part time job I enjoy)

I can borrow against taxable portfolio ar 5.08% (variable.) The idea would be to borrow in lieu of selling shares and paying 15% LTCG and reducing my invested capital. Long term I expect market to out pace interest and eventually heirs can pay off the debt with the inherited assets with stepped up basis and zero LTCG tax. I'd borrow no more than 2% of taxable portfolio each year and stop if balance approaches 30%.

This would allow us to increase lifestyle in early retirement without locking into 72(t) or selling taxable assets and paying LTCG instead of allowing them to continue growth and passing more to heirs with tax free step up.

Other than a black swan event/massive market crash and interest rate risk, what am I missing?
Is 2% per year and 30% of portfolio max a reasonable guardrail?