Thread: Dividend INvestments after retirement

Boghie, thanks. My question was on the dividend payments and taxes. I had thought dividends would afford me extra monthly income inlieu of 72T but leave me the ability to add money to an IRA. I guess I'll need to do some further research.

Originally Posted by Boghie

Kaufmanrider,

HUGE RED FLAG



At age 49 you will NOT be considered retired by the IRS. None of your TSP or Traditional IRA assets can be drawn from a retirement account without penalty prior to reaching a true retirement age - you already know about the 72T variant of true retirement... Retirement age is 55, and there must be no willful intent to seek other employment.

That includes the gains and dividends of holdings in your retirement account - whether TSP or an IRA.

I think you are setting yourself up for a huge and complicated tax situation.

Regardless, I'll bet your chosen IRA custodian will not even let you do this. My guess is that they will force you to keep the dividends in the retirement account till you reach retirement age. The advice to seek professional help is critical for your idea - and, my guess is that a very good tax attorney would be the best bet.

Why not consider a discount brokerage account and just purchase dividend paying stocks and reinvest those dividends. I have 3 dividends due today and 8 due tomorrow. On 6/1 I have 17 that will be reinvested and a total of around 75 for the month. I've received 78 dividend increase announcements so far this year - that's good money coming into my account. Qualified dividends are taxed at 15% along with long term capital gains - with new leadership those rates will be continued to help the economy. Every three months the cycle is repeated and when a dividend is reinvested at good pricing you acquire more shares and then three months later you've earned a larger dividend payout - it's a regular self-feeding system. I use my margin interest deduction to offset my dividend taxes - margin can be productive but also dangerous but for me it's worth the opportunity.

You might want to check out Vanguard Wellesly income fund.