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The website for my 401(k) provider has a Roth versus Traditional calculator. I ran it using the following info and it shows the outcome as basically a wash:
Wages: High earner
Contribution: Maximum
Current marginal federal tax rate: 28%
Future marginal federal tax rate: 25%
Current marginal state tax rate: 10%
Future marginal state tax rate: 0% and 5%
Pre-retirement return: 12%
Post-retirement return: 6%
Retirement age: 55 and 60 and 65
Years in retirement: 40 and 35 and 30
The result surprised me but it gave me the push I needed to try the Roth this year. It still feels like I'm missing something.
I will lose a little more of my itemized deductions but that won't affect how much we save which includes fully funding our traditional IRA's.
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