Hello all,
My questions is how is a Roth IRA better than a 401k? Giving certain circumstances I believe that the 401k would be better (unless I'm missing something fundamental, and I most likely am). People always use the same amount when comparing them, when in reality you can save more in the 401k than you can with the Roth IRA to have the same hit in your take home pay. The certain circumstances are that you don't plan on changing tax brackets, and that the tax brakets don't change a whole lot (not counting on this one). Here's an exsample.
assumptions, in the 15% tax braket.
850 in the Roth IRA, or I could put 1000 in the 401k.
if they both grow at the same rate I'll be able to withdrawl on the 401k with my standard deductable/plus lower tax makeup, thus making the actual taxes I pay on the 401k less than the 15% I would have paid meaning more money for me in the long run over the Roth.
I've done the math many time's with different amounts and brakets and I come up with the same results.
What variable am I missing?
Thanks,
P.S.
Don't be too hard on me, this is my first post.
My questions is how is a Roth IRA better than a 401k? Giving certain circumstances I believe that the 401k would be better (unless I'm missing something fundamental, and I most likely am). People always use the same amount when comparing them, when in reality you can save more in the 401k than you can with the Roth IRA to have the same hit in your take home pay. The certain circumstances are that you don't plan on changing tax brackets, and that the tax brakets don't change a whole lot (not counting on this one). Here's an exsample.
assumptions, in the 15% tax braket.
850 in the Roth IRA, or I could put 1000 in the 401k.
if they both grow at the same rate I'll be able to withdrawl on the 401k with my standard deductable/plus lower tax makeup, thus making the actual taxes I pay on the 401k less than the 15% I would have paid meaning more money for me in the long run over the Roth.
I've done the math many time's with different amounts and brakets and I come up with the same results.
What variable am I missing?
Thanks,
P.S.
Don't be too hard on me, this is my first post.