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To Roth or Not
Old 10-28-2014, 04:15 PM   #21
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To Roth or Not

Everyone saying "401k first for the tax benefit, then roth". Isnt that advice a bit inconsistent. If the tax benefit is the goal, why not 401k then Tira.

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Old 10-28-2014, 06:20 PM   #22
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401k gets a tax benefit at any income level. Tira vs roth IRA depends on income level and many posters get no tax deduction for a Tira, so if there is no tax deduction then the same dollars into a Roth is much more valuable.

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Old 10-29-2014, 02:06 PM   #23
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To answer the Roth question and more, I've found the ORP calculator to be very helpful.

The author is very responsive to questions and suggestions.

It's an interesting tool to play with and try things. Very educational. The help files are must reading.
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Old 10-30-2014, 02:23 AM   #24
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the part folks get wrong is they compare their final years income and tax rates to what they think it will be in retirement.

wrong thinking!

there was a whole lifetime of tax rates you passed through for decades that may actually average out way below your final years.

decades of ramping up and taking the deductions may actually leave you down the road in a higher tax rate than your life time average.

for most youngins who are starting out and do not have jobs that plop them in the highest brackets right away a roth has amazing power.

so much so that it would take a 9% difference in tax rates by age 55 to offset the typical rising glide path most folks have .

even if tax rates stayed the same the roth would leave most with 15-20% more spendable income because of this lifetime average tax rate factor.

throw in the fact rmds's have any money re-invested in a taxable account taxed forever while roths still grow tax free and the fact you may get your ss taxed and roths win hands down even with no rate change .

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