Quick Read – ARCC and AGNC generate ordinary-income dividends that cost a couple in the 24% bracket $19,200 annually when held outside a Roth. – That $19,200 annual tax drag accumulates to $192,000 over 10 years, with reinvested distributions compounding the Roth advantage even…
rther. – At the 37% bracket, the same basket triggers a $29,600 annual federal tax bill that disappears entirely inside a Roth. – The analyst who called NVIDIA in 2010 just named his top 10 stocks and AGNC Investment wasn’t one of them. Get them here FREE
A married couple filing jointly in the 24% federal bracket who pull in $80,000 in ordinary dividend income from a taxable brokerage will have to hand over $19,200 to the IRS every year. That is the entire cost of holding BDCs and mortgage REITs in the wrong account. Inside a Roth IRA, that same basket of stocks pays out the full $80,000, untouched.
The Tax Delta: Roth Versus Taxable The basket below is built from three ordinary-income payers. None of them qualify for the preferential 15% qualified-dividend rate. Every dollar distributed is taxed at the investor’s marginal ordinary rate. – Ares Capital (NASDAQ:ARCC): current yield of 10% on a $1.92 annualized payout.