Search found 3 matches

by Rouster
Sun Feb 10, 2019 4:16 pm
Forum: Personal Investments
Topic: Whats better to hold, Roth dollars or Tax-deferred dollars ?
Replies: 84
Views: 7788

Re: Whats better to hold, Roth dollars or Tax-deferred dollars ?

Employer match is always deferred regardless if it is a traditional 401K or Roth 401K contribution.
by Rouster
Sun Feb 10, 2019 1:15 pm
Forum: Personal Investments
Topic: Whats better to hold, Roth dollars or Tax-deferred dollars ?
Replies: 84
Views: 7788

Re: Whats better to hold, Roth dollars or Tax-deferred dollars ?

o2nz: If the federal income tax rates remained constant, you have a point. This is what I found. For 2018, the peak of 12% rate for married couples is $101,400 income, translating to $8,907 in taxes. In 2017, the tax would be $13,653. That is $4,746 higher taxes in the previous year. Thus, you are "saving" less in deferring your taxes in 2018-(2025?). The differential gets progressively greater going back further in time (eg. 2002 would be $19,055 in taxes). When this wave of reduced taxes ends (2025?), expect to pay progressively more on traditional IRA distributions with the increased rates. Other Roth advantages: There is no RMD at 70 1/2 Accounts can be transferred to heirs and tax-free RMD's are tied to their expected lifetim...
by Rouster
Sat Feb 09, 2019 8:53 pm
Forum: Personal Investments
Topic: Whats better to hold, Roth dollars or Tax-deferred dollars ?
Replies: 84
Views: 7788

Re: Whats better to hold, Roth dollars or Tax-deferred dollars ?

Let's say you are investing in a company 401K and are under 30. The company offers a Roth and has matching. Take up to the matching percentage. This will accumulate your money in a Roth and the company match in a traditional deferred account. Next step, fill your Roth to max allowable in a core account in a major brokerage house (Fidelity, Vanguard, T Rowe Price, etc.) for you to decide how you want to manage it. Additional money thereafter, Roth in the 401K. Why? Taxes are the lowest since the 1920"s. Given the national debt of about 21 Trillion and rising, the demographic profile will change and taxes will certainly increase after 2025, if not earlier. Same type of thing for an IRA. Roth first, due to the horizon of the federal tax i...