Roth or Traditional for Young Investor
- Thread starter mountainsoft
- Start date
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- Oct 13, 2010
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I'm not sure that paying zero tax now is the right goal.
I always thought that you wanted to have your marginal tax now about the same as your marginal tax when you were retired and removing money from your tax sheltered accounts. That way, you'd never be in the super-high marginal tax brackets. So the strategy might be called "fill up the reasonably low brackets", which, if you ask me, is at least the 15% bracket.
The advice I gave my kids was to get the 401k match, then put the rest in Roth, and to use a Roth 401k if you could. The asterisk was that if they ever started to make "a lot of money", which pushed them into the high tax brackets, then revisit the idea, and possibly put money into tIRA instead of Roth.
I always thought that you wanted to have your marginal tax now about the same as your marginal tax when you were retired and removing money from your tax sheltered accounts. That way, you'd never be in the super-high marginal tax brackets. So the strategy might be called "fill up the reasonably low brackets", which, if you ask me, is at least the 15% bracket.
The advice I gave my kids was to get the 401k match, then put the rest in Roth, and to use a Roth 401k if you could. The asterisk was that if they ever started to make "a lot of money", which pushed them into the high tax brackets, then revisit the idea, and possibly put money into tIRA instead of Roth.
Dean56
Recycles dryer sheets
- Joined
- Aug 31, 2018
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- 265
Use both.
Pre-tax to 401k/403b/TSP (as much as they can save).
Tax savings to Roth IRA. 12%, 22% depending on what marginal tax bracket.
$5,000 pre-tax + 1,300 Roth IRA
If they get north of $1 million in pre-tax, then there might be an "all Roth" discussion.
Pre-tax to 401k/403b/TSP (as much as they can save).
Tax savings to Roth IRA. 12%, 22% depending on what marginal tax bracket.
$5,000 pre-tax + 1,300 Roth IRA
If they get north of $1 million in pre-tax, then there might be an "all Roth" discussion.
