teejayevans
Thinks s/he gets paid by the post
- Joined
- Sep 7, 2006
- Messages
- 1,691
You can play games with numbers, but mathjak's basic premise is correct.o really? how bout this.
For Roth:
(B*Tr)*Int where B is beginning balance, Tr is tax rate (ie 0.75 if in 25%
tax bracket), and Int is the interest rate return.
for IRA:
(B*Int)*Tr ....which is exactly the same as Roth.
The Roth allows you to invest more because you pay the taxes up front
before you deposit the money. Advantage Roth. So if in 20% tax bracket,
your $5k in the Roth costs $6K, so your total investment cost is more than
if you put the money into a regular IRA. So you have to remember this when comparing IRA vs Roth comparison.
Then it becomes a question of tax rates now or later.
TJ