That is correct. The issue is that social security payments have a sort of tax bracket that's based on your adjusted gross income (AGI). If you're single and collecting SS, if your combined income (which is your AGI + half of SS) is:
less than $25K --- none of your SS is taxed like normal income
between $25K and $34K -- 50% of your SS is taxed
over $35K -- 85% of your SS is taxed
For married filing jointly the 50% begins at $32K and the 85% begins at $44K. (Yet another example of the "marriage penalty" in our taxes.)
The original poster pointed out how he could have avoided more of that with doing more Roth investing. My wife and I invest in Roth 401K's at work (though the company matches go to traditional 401K). When we have extra in our budget we invest in our Roth IRA's. Then when we retire in our mid-50's (using the IRS's "Age 55" rule for withdrawing from 401K's w/o penalty), I'll rollover the traditional 401K money into our Roth IRA's. (Each rollover is itself taxable as though we did a withdrawal from the 401K, so I won't roll it all over in one year. I'll do it in chunks per year to keep up from going into a higher tax bracket each year.) Therefore, during retirement we'll withdraw from our Roth IRA's to live on and have to pay nothing in taxes for it. Later when we start collecting SS in our 60's (assuming there's still such a thing as SS by then), our AGI will be next to nothing. This will mean none of our SS checks will be taxed. Even though we'll be millionaires.
And BobL is right about the change to inherited Roth IRA's. I had planned on my grown "kids" to be able to slowing withdraw from their inherited Roth IRA's using the old RMD calculation to force RMD's spread out over their lifetimes. But the new law change says they have to have their inherited Roth IRA's emptied in 10 years. (That's for non-spouse inherited Roth IRA's.)
That's true, but it won't be taxed. So if they want to pay off their houses with the money, they could in the first year or take the whole thing out - no taxes from what I understand.
It is the Traditional Inherited Non-Spouse IRA that is the Nasty. Yeah, that would be taxed out the bejeebers by them. UGH!