Do you know the difference between qualified dividends and non-qualified dividends in your investment portfolio? Knowing the difference could mean a smaller tax bill or a much larger one in retirement.
I’ve come across a great YouTube video on the subject so rather than write a wordy explanation, it’s just easier to watch this video than explain the topic.
It’s a good starting point to understand some of the ramifications of having the wrong investment in the wrong retirement bucket to save you a great deal of tax grief.
Needless to say, I continue to tweak my retirement buckets to make sure they are aligned with maximizing income, minimizing taxes and optimizing medicare & social security taxation.
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Did you find this video helpful? Let me know in the comments below.
This was a good video and I usually don’t like YouTube videos. I thought it was unique how she modeled the send tier of the tax bracket.
I had never heard of JEPQ before. I’m skeptical about it being able to pay those kinds of dividends over the long term. Anyone would take a guaranteed 9% right? She does mention companies that are yield traps, but this makes me think it’s a strategy that’s a yield trap.
When I model our income in retirement, it assuredly is going to stay in the 24% tax bracket, probably in the 22% with deductions. So it sounds like qualified dividends that would be in the 15% is the way to go. However, the long-term capital gains rate is 15% for the huge bucket we’d be in too.
So it seems that the goal would be limit the non-qualified dividends. I got some of those from my investment in VNQ, but they are also 199a dividends, which has its own separate deduction stuff that’s set to expire this year.
I’m not dealing with millions like in the videos example, because most of our money is in retirement accounts. The more important thing I think is going to be to try to get the non-Roth out and taxed under the lowest ordinary income. That might be where we push those tax brackets some.
Glad you found it useful. I own a little bit of JEPI but not JEPQ as an experiment. The great news is there are now thousands of ways to invest, the bad news is that there are now thousands of ways to invest.