You gonna go back and set the record straight on that other forum?
I just got flamed on another forum for something similar.
Well ya, the original poster of this 7 years ago, (!) did respond and doubled down. Here's what I just finished responding with, critic me as needed, I might need to go back and correct myself.
"I’ll run through the numbers for you and everyone else. I’ll chose a 48 yr old married couple, with a $29,200 standard deduction and a $120,000 income. Their AGI is, $120,000 -$27,200 = $92,800. The tax would be 10% of the first $23,200, or $2,320 and 12% on, $92,800 - $23,200 = $69,600, or $8,352 of tax. For a total tax of $2,320,+ $8,352 = $10,672. Marginal rate, 12%, Effective rate, 8.7%
Now, if they did a 401k contribution of $10,000, That would reduce their income to $110,000. Their AGI would be $110,000- $27,200 =$82,800, The tax would be 10% of the first $23,200 or $2,320 and 12% on $82,800 - $23,200 = $59,600 or $7,152 of tax. For a total tax of $2,320 + $7152 = $9,472. So by using the 401k they saved, $10,672 - 9472 = $1200. $1200 is 12% of the $10,000 they put into the 401k. This means if they put the $10,000 into a Roth/401k, they would lose the deduction of $1,200. That $1,200 is 12% of $10,000, AND is the Marginal Rate. The $10,000 you put into the Roth/401k was taxed at 12%.
Marginal Tax Rate, 12% Effective rate with 401k, 8.74%
If you disagree, please explain."