M********y
发帖数: 1121 | 1 The company offers both and I can not decide which one to get. The marginal
federal tax bracket for now will be around 28%-33%. It will be much higher
considering other state and SS taxes. Don't know if the tax rate will get
any higher in the future.
Can anyone share some thoughts? Thank you! |
Q***u
发帖数: 433 | 2 If you're at 28-33% now, I think you'll be better off with traditional 401(k
). You can't predict what the Federal tax brackets are in the future. That's
not what you should worry and it's beyond your control.
What you need to think is the specific income and tax rate when you retire.
If you believe all you earn during retirement is social security, 401(k)
distributions, some investment dividends, and so on, then the chances are
your retirement income will be significantly lower than what you earn now.
That's what matters.
For example, you earn $100k a year now at 28% rate. Even if this rate
increases to 35% in the future, you'll only earn $50,000 a year when you
retire, which will most likely still qualify you for a rate lower than 35%, which
might be 20%. |
M********y
发帖数: 1121 | 3 That's what I was thinking too... Thank you!
(k
's
.
【在 Q***u 的大作中提到】
: If you're at 28-33% now, I think you'll be better off with traditional 401(k
: ). You can't predict what the Federal tax brackets are in the future. That's
: not what you should worry and it's beyond your control.
: What you need to think is the specific income and tax rate when you retire.
: If you believe all you earn during retirement is social security, 401(k)
: distributions, some investment dividends, and so on, then the chances are
: your retirement income will be significantly lower than what you earn now.
: That's what matters.
: For example, you earn $100k a year now at 28% rate. Even if this rate
: increases to 35% in the future, you'll only earn $50,000 a year when you
|
b********k
发帖数: 431 | 4 nice comment, and also diversify the investments, be conservitive on the
retirement plan.
(k
's
.
【在 Q***u 的大作中提到】
: If you're at 28-33% now, I think you'll be better off with traditional 401(k
: ). You can't predict what the Federal tax brackets are in the future. That's
: not what you should worry and it's beyond your control.
: What you need to think is the specific income and tax rate when you retire.
: If you believe all you earn during retirement is social security, 401(k)
: distributions, some investment dividends, and so on, then the chances are
: your retirement income will be significantly lower than what you earn now.
: That's what matters.
: For example, you earn $100k a year now at 28% rate. Even if this rate
: increases to 35% in the future, you'll only earn $50,000 a year when you
|
o******8
发帖数: 620 | 5 This is the best comments I have seen on tax bracket (by a real
person). Thanks!
traditional 401(k
future. That's
when you retire.
401(k)
chances are
you earn now.
this rate
when you
【在 Q***u 的大作中提到】
: If you're at 28-33% now, I think you'll be better off with traditional 401(k
: ). You can't predict what the Federal tax brackets are in the future. That's
: not what you should worry and it's beyond your control.
: What you need to think is the specific income and tax rate when you retire.
: If you believe all you earn during retirement is social security, 401(k)
: distributions, some investment dividends, and so on, then the chances are
: your retirement income will be significantly lower than what you earn now.
: That's what matters.
: For example, you earn $100k a year now at 28% rate. Even if this rate
: increases to 35% in the future, you'll only earn $50,000 a year when you
|
w*****n
发帖数: 19 | 6 由俭入奢易，由奢入俭难。:-)
Your example is way off! :-O
Considering this case here, MyDearBaby might have at least 20-30 years of
work ahead. Let us use 25 years for work life.
If you earn $100k/yr now, what will you salary be after 25 years before
retirement? Still $100k/yr? Even if your salary at that time is still $100k,
would you like to live from a life with a quality of having $100k a year
suddenly to a life with only $50k a year?
Even if you could bear with your income dropped 50%, do you really agree
that your retirement life cost will be lower? Grab some senior friends and
ask them. Medical expenses, Long Term Care, expenses on the second
generation, etc are potential high costs.
If you have $100 now, can you still buy same amount of eggs or gas 25 years
later when you retire? The average inflation rate is 3%. That means 25 years
later, to buy same amount of eggs or gas, you need to have at least $200.
There are general rules for investing for the future:
If you think you live a life better and better, Roth is better;
If you think you live a life worse and worse, traditional is better.
Too much to be covered here. If really interested, send a message/mail to me.
(k
's
.
【在 Q***u 的大作中提到】
: If you're at 28-33% now, I think you'll be better off with traditional 401(k
: ). You can't predict what the Federal tax brackets are in the future. That's
: not what you should worry and it's beyond your control.
: What you need to think is the specific income and tax rate when you retire.
: If you believe all you earn during retirement is social security, 401(k)
: distributions, some investment dividends, and so on, then the chances are
: your retirement income will be significantly lower than what you earn now.
: That's what matters.
: For example, you earn $100k a year now at 28% rate. Even if this rate
: increases to 35% in the future, you'll only earn $50,000 a year when you
|
K****D
发帖数: 30533 | 7 Your point of view does not represent the consensus of the majority
of financial advisors. In fact, deciding or projected tax bracket
(as mentioned earlier in this thread) is indeed a prevailing idea
(especially among American advisors).
The common conclusion is 28% and above marginal tax rate should
definitely go with traditional, while 25% should still consider
going traditional. 15% though, should go with Roth.
Typically life expenses after retirement is significantly lower
than those before retirement -- except maybe for the last couple
of years due to huge medical expenses (for some people). You
already have a paid-for residence. You do not need to support
children's living and education expenses. Those two aspects alone
knocks off a huge chunk of expenses.
100k,
【在 w*****n 的大作中提到】
: 由俭入奢易，由奢入俭难。:-)
: Your example is way off! :-O
: Considering this case here, MyDearBaby might have at least 20-30 years of
: work ahead. Let us use 25 years for work life.
: If you earn $100k/yr now, what will you salary be after 25 years before
: retirement? Still $100k/yr? Even if your salary at that time is still $100k,
: would you like to live from a life with a quality of having $100k a year
: suddenly to a life with only $50k a year?
: Even if you could bear with your income dropped 50%, do you really agree
: that your retirement life cost will be lower? Grab some senior friends and
|
Q***u
发帖数: 433 | 8 First all, those numbers are simply an example. Couldn't believe you're
making such a fuss about those numbers.
Secondly, right now, every month my wife and I put 38% of our earnings into
401(k)'s, Roth IRA's, and 529's. Mortgage and childcare are another $3000 a
month. So, I don't know about you. Based on our current living style, I'm
pretty sure we can live with 50% of our current income during retirement,
knowing that we won't have to worry about mortgage and kids education
anymore. --But that's just me.
100k,
【在 w*****n 的大作中提到】
: 由俭入奢易，由奢入俭难。:-)
: Your example is way off! :-O
: Considering this case here, MyDearBaby might have at least 20-30 years of
: work ahead. Let us use 25 years for work life.
: If you earn $100k/yr now, what will you salary be after 25 years before
: retirement? Still $100k/yr? Even if your salary at that time is still $100k,
: would you like to live from a life with a quality of having $100k a year
: suddenly to a life with only $50k a year?
: Even if you could bear with your income dropped 50%, do you really agree
: that your retirement life cost will be lower? Grab some senior friends and
|
t***s
发帖数: 4666 | 9 a few things to keep in mind.
1. required minimum distribution
2. emergency need
3. rising medical cost
4. uncertainty about future tax rate
5. uncertainty about future availability of roth 401k from your employer
6. effectively more money enjoying the tax benefit for roth 401k
into
a
【在 Q***u 的大作中提到】
: First all, those numbers are simply an example. Couldn't believe you're
: making such a fuss about those numbers.
: Secondly, right now, every month my wife and I put 38% of our earnings into
: 401(k)'s, Roth IRA's, and 529's. Mortgage and childcare are another $3000 a
: month. So, I don't know about you. Based on our current living style, I'm
: pretty sure we can live with 50% of our current income during retirement,
: knowing that we won't have to worry about mortgage and kids education
: anymore. --But that's just me.
:
: 100k,
|
K****D
发帖数: 30533 | 10 Without these things, I would say 100% of people in 15% tax bracket
should stop contributing to 401k (non-matching part).
With these things, I may drop it to 99.9%, hehe.
【在 t***s 的大作中提到】
: a few things to keep in mind.
: 1. required minimum distribution
: 2. emergency need
: 3. rising medical cost
: 4. uncertainty about future tax rate
: 5. uncertainty about future availability of roth 401k from your employer
: 6. effectively more money enjoying the tax benefit for roth 401k
:
: into
: a
|
|
|
t***s
发帖数: 4666 | 11 i'm trying to argue for roth 401k. we are in a very high marginal rate
right now, thanks to the amt, but we are still selecting roth 401k.
【在 K****D 的大作中提到】
: Without these things, I would say 100% of people in 15% tax bracket
: should stop contributing to 401k (non-matching part).
: With these things, I may drop it to 99.9%, hehe.
|
K****D
发帖数: 30533 | 12 Why is that? I just don't understand.
It will be very difficult for most people to have higher marginal
tax rate after retirement than now, AMT or not, even considering
the minimum required distribution.
【在 t***s 的大作中提到】
: i'm trying to argue for roth 401k. we are in a very high marginal rate
: right now, thanks to the amt, but we are still selecting roth 401k.
|
t***s
发帖数: 4666 | 13 historically tax rate has been higher. and certainty about the
tax has value too. and what if you need a lot of money for emergency
purpose in one year? and if you think 401k/ira makes sense, wound't it
make sense to put more money in it? and what if the government stops
the roth all together in the future? what if you change a company
and they don't have roth 401k?
【在 K****D 的大作中提到】
: Why is that? I just don't understand.
: It will be very difficult for most people to have higher marginal
: tax rate after retirement than now, AMT or not, even considering
: the minimum required distribution.
|
Q***u
发帖数: 433 | 14 Uncertainties are uncertainties. Nobody can really predict which way the
uncertainties will go. So, in the end, it all boils down to where each
person stands regarding the uncertainties. I myself still firmly believe
that for most Chinese--who're avid savers compared to Americans--they should
choose the traditional if their current tax bracket is greater than 28%.
But in the end, each person has different risk tolerance, life style, and so
on. So, it's impossible to have a universal answer.
【在 t***s 的大作中提到】
: a few things to keep in mind.
: 1. required minimum distribution
: 2. emergency need
: 3. rising medical cost
: 4. uncertainty about future tax rate
: 5. uncertainty about future availability of roth 401k from your employer
: 6. effectively more money enjoying the tax benefit for roth 401k
:
: into
: a
|
Q***u
发帖数: 433 | 15 For emergency money, I don't believe your 401(k)--Roth or traditional--will
be your sole source of investment. You certainly have other non-retirement
investment, don't you?
401(k) has a yearly contribution limit. Even if I wanted to put more in it,
I'm not allowed to do it.
If your main concern is afraid of losing Roth 401(k) when switching
employers, yeah, then I guess it makes sense to choose Roth since you
like it better.
【在 t***s 的大作中提到】
: historically tax rate has been higher. and certainty about the
: tax has value too. and what if you need a lot of money for emergency
: purpose in one year? and if you think 401k/ira makes sense, wound't it
: make sense to put more money in it? and what if the government stops
: the roth all together in the future? what if you change a company
: and they don't have roth 401k?
|
K****D
发帖数: 30533 | 16 Even if you max out 401k every year, it's still very hard to reach
4 million when you retire. The min distribution on that is probably
$150k max, or a comfortable 25% tax bracket.
Uncertainty is a 双刃剑。Some people may feel more comfortable
to save tax now just because of the uncertainty. You save 28%
up front. That's more certain!
If you care about uncertainty, statistically most people have
lower tax rate after retirement than now. Your odds are not good
betting against it. (i.e. it takes some luck to make it higher,
including the "suddenly need a lot of cash" type of emergency.)
【在 t***s 的大作中提到】
: historically tax rate has been higher. and certainty about the
: tax has value too. and what if you need a lot of money for emergency
: purpose in one year? and if you think 401k/ira makes sense, wound't it
: make sense to put more money in it? and what if the government stops
: the roth all together in the future? what if you change a company
: and they don't have roth 401k?
|
a*****n
发帖数: 5158 | 17
actually not very difficult
老了，就没有dependent,没有杂7杂8 deduction,
tax bracket升上去太easy了
【在 K****D 的大作中提到】
: Why is that? I just don't understand.
: It will be very difficult for most people to have higher marginal
: tax rate after retirement than now, AMT or not, even considering
: the minimum required distribution.
|
K****D
发帖数: 30533 | 18 Well, unless you really have a more than 2 million traditional
401k/IRA account at retirement that triggers huge minimum
required distribution, I wouldn't worry about the tax rate.
I personally put 401k the lowest priority in my portfolio. I want
it to earn as little as possible. For the whole 2010 it was all
cash. For Roth, though, I am often all-in...
【在 a*****n 的大作中提到】
:
: actually not very difficult
: 老了，就没有dependent,没有杂7杂8 deduction,
: tax bracket升上去太easy了
|
t***s
发帖数: 4666 | 19 with roth, effectively you save more with the same annual limit.
will
,
【在 Q***u 的大作中提到】
: For emergency money, I don't believe your 401(k)--Roth or traditional--will
: be your sole source of investment. You certainly have other non-retirement
: investment, don't you?
: 401(k) has a yearly contribution limit. Even if I wanted to put more in it,
: I'm not allowed to do it.
: If your main concern is afraid of losing Roth 401(k) when switching
: employers, yeah, then I guess it makes sense to choose Roth since you
: like it better.
|
t***s
发帖数: 4666 | 20 historically the rate is low right now.
【在 K****D 的大作中提到】
: Even if you max out 401k every year, it's still very hard to reach
: 4 million when you retire. The min distribution on that is probably
: $150k max, or a comfortable 25% tax bracket.
: Uncertainty is a 双刃剑。Some people may feel more comfortable
: to save tax now just because of the uncertainty. You save 28%
: up front. That's more certain!
: If you care about uncertainty, statistically most people have
: lower tax rate after retirement than now. Your odds are not good
: betting against it. (i.e. it takes some luck to make it higher,
: including the "suddenly need a lot of cash" type of emergency.)
|
|
|
K****D
发帖数: 30533 | 21 Financial advisors already considered that.
Odds are still against you, hehe.
【在 t***s 的大作中提到】
: historically the rate is low right now.
|
t***s
发帖数: 4666 | 22 i wouldn't take the words of those financial advisors too seriously.
【在 K****D 的大作中提到】
: Financial advisors already considered that.
: Odds are still against you, hehe.
|
K****D
发帖数: 30533 | 23 I know, but what they say is tax rate will be hiked for high income
people first and the chance for regular people to get hit is very
low. I kinda of believe that.
But you sound like high income people who may get damaged... If so
it's up to you how to estimate the risk leh.
I am the type of guy that likes to pocket profit. If a stock is
high, I sell it. If I can save 25% tax, I save it. All because
of fear for uncertainty in the opposite aspect, hehe.
【在 t***s 的大作中提到】
: i wouldn't take the words of those financial advisors too seriously.
|
t***s
发帖数: 4666 | 24 you and me are already considered high income people by obama.
【在 K****D 的大作中提到】
: I know, but what they say is tax rate will be hiked for high income
: people first and the chance for regular people to get hit is very
: low. I kinda of believe that.
: But you sound like high income people who may get damaged... If so
: it's up to you how to estimate the risk leh.
: I am the type of guy that likes to pocket profit. If a stock is
: high, I sell it. If I can save 25% tax, I save it. All because
: of fear for uncertainty in the opposite aspect, hehe.
|
K****D
发帖数: 30533 | 25 I am in the 15% tax bracket!
【在 t***s 的大作中提到】
: you and me are already considered high income people by obama.
|
t***s
发帖数: 4666 | 26 zan. then you really should do roth.
【在 K****D 的大作中提到】
: I am in the 15% tax bracket!
|
S**C
发帖数: 2964 | 27 My take is to have a healthy dose of ROTH to diversify tax risk. I think 20%
-30% ROTH in total retirement asset is nice to have. Without RMD, and
without incurring large tax bill when emergency comes. |
K****D
发帖数: 30533 | 28 Of course, no brainer even for a traditional 401k advocate, lol.
Only if my employer provides me a Roth choice...
【在 t***s 的大作中提到】
: zan. then you really should do roth.
|
a*****n
发帖数: 5158 | 29
不理解,
你一口一个将来税低,那干嘛投roth干嘛而不投traditional ira?
【在 K****D 的大作中提到】
: Well, unless you really have a more than 2 million traditional
: 401k/IRA account at retirement that triggers huge minimum
: required distribution, I wouldn't worry about the tax rate.
: I personally put 401k the lowest priority in my portfolio. I want
: it to earn as little as possible. For the whole 2010 it was all
: cash. For Roth, though, I am often all-in...
|
K****D
发帖数: 30533 | 30 Because my tax rate is 15%.
Even if 25%, I would still go with Roth IRA, because it has some
many other nice features that a traditional cannot match.
I don't think anybody at 28% or above tax rate can still contribute
to Roth. So basically my conclusion is:
1) everybody should do Roth as long as they can.
2) If they can't, they should always do Traditional IRA. They can't
just do nothing and waste the quota!
【在 a*****n 的大作中提到】
:
: 不理解,
: 你一口一个将来税低,那干嘛投roth干嘛而不投traditional ira?
|
|
|
s**********d
发帖数: 36899 | 31 算税率的时候要算回头退休了你expect每年收入多少。
另外记得你可以搬到税低或没有的地方减掉州税。 |
Q***u
发帖数: 433 | 32 I wholeheartedly agree with this. My wife and I have had two Roth IRA's
since 2000, which now accounts of 24% of our total retirement saving. I was
thinking to use them to hedge against any of those future "uncertainties"...
20%
【在 S**C 的大作中提到】
: My take is to have a healthy dose of ROTH to diversify tax risk. I think 20%
: -30% ROTH in total retirement asset is nice to have. Without RMD, and
: without incurring large tax bill when emergency comes.
|
Q***u
发帖数: 433 | 33 Are you kidding me?? :|
After all these talks, I thought you were a millionaire! :P
【在 K****D 的大作中提到】
: I am in the 15% tax bracket!
|
k***u
发帖数: 176 | 34 我顺路问个问题,Married file jointly 是每人可以存5000ROTH, 对吧?
【在 K****D 的大作中提到】
: Because my tax rate is 15%.
: Even if 25%, I would still go with Roth IRA, because it has some
: many other nice features that a traditional cannot match.
: I don't think anybody at 28% or above tax rate can still contribute
: to Roth. So basically my conclusion is:
: 1) everybody should do Roth as long as they can.
: 2) If they can't, they should always do Traditional IRA. They can't
: just do nothing and waste the quota!
|
a**r
发帖数: 661 | 35 he is in 15% bracket does not mean his income is low.
【在 Q***u 的大作中提到】
: Are you kidding me?? :|
: After all these talks, I thought you were a millionaire! :P
|
t*m
发帖数: 4414 | 36 in fact, many people spend more money after retirement.
Since no need to work anymore, they go out and have fun (cost $$$) all day
long.
3000
m
,
【在 t***s 的大作中提到】
: a few things to keep in mind.
: 1. required minimum distribution
: 2. emergency need
: 3. rising medical cost
: 4. uncertainty about future tax rate
: 5. uncertainty about future availability of roth 401k from your employer
: 6. effectively more money enjoying the tax benefit for roth 401k
:
: into
: a
|
t*m
发帖数: 4414 | 37 why still roth 401K?
I am in AMT now (35% federal tax) + 5.3% MA state tax. I feel regular 401K
+ roth IRA is good.
【在 t***s 的大作中提到】
: i'm trying to argue for roth 401k. we are in a very high marginal rate
: right now, thanks to the amt, but we are still selecting roth 401k.
|
t*m
发帖数: 4414 | 38 what percentage of employer only give regular but not roth 401K?
will
,
【在 Q***u 的大作中提到】
: For emergency money, I don't believe your 401(k)--Roth or traditional--will
: be your sole source of investment. You certainly have other non-retirement
: investment, don't you?
: 401(k) has a yearly contribution limit. Even if I wanted to put more in it,
: I'm not allowed to do it.
: If your main concern is afraid of losing Roth 401(k) when switching
: employers, yeah, then I guess it makes sense to choose Roth since you
: like it better.
|
t*m
发帖数: 4414 | 39 He is in AMT. dependent won't result in any deduction.
【在 a*****n 的大作中提到】
:
: 不理解,
: 你一口一个将来税低,那干嘛投roth干嘛而不投traditional ira?
|
t*m
发帖数: 4414 | 40 true
retirement
it
【在 t***s 的大作中提到】
: with roth, effectively you save more with the same annual limit.
:
: will
: ,
|
|
|
t*m
发帖数: 4414 | 41 all your income is long-term capital gain?
WOW, you are the man.
【在 K****D 的大作中提到】
: I am in the 15% tax bracket!
|
K****D
发帖数: 30533 | 42 Nope. I claimed capital loss for the past 3 years.
15% == low income.
【在 t*m 的大作中提到】
: all your income is long-term capital gain?
: WOW, you are the man.
|
t***s
发帖数: 4666 | 43 we are in 35% federal (AMT) and 10.xx% CA. so i guess i'm nuts.
401K
【在 t*m 的大作中提到】
: why still roth 401K?
: I am in AMT now (35% federal tax) + 5.3% MA state tax. I feel regular 401K
: + roth IRA is good.
|
t***s
发帖数: 4666 | 44 a lot. probably majority of the employers.
【在 t*m 的大作中提到】
: what percentage of employer only give regular but not roth 401K?
:
: will
: ,
|
Q***u
发帖数: 433 | 45 That's what I thought, too. Don't count on many small businesses, for example,
to offer Roth 401k because of the added administrative cost.
【在 t***s 的大作中提到】
: a lot. probably majority of the employers.
|
t*m
发帖数: 4414 | 46 CA has tax bracket. MA is flat 5.3%.
in the end, the marginal tax rate will be similar.
【在 t***s 的大作中提到】
: we are in 35% federal (AMT) and 10.xx% CA. so i guess i'm nuts.
:
: 401K
|
t***s
发帖数: 4666 | 47 not really. for practical purpose, you can just think CA tax rate is
flat 10%.
【在 t*m 的大作中提到】
: CA has tax bracket. MA is flat 5.3%.
: in the end, the marginal tax rate will be similar.
|
t*m
发帖数: 4414 | 48 really? I used to live in San Mateo County, and remember CA also have AMT,
still true?
【在 t***s 的大作中提到】
: not really. for practical purpose, you can just think CA tax rate is
: flat 10%.
|
t***s
发帖数: 4666 | 49 yes. and the threhold for top bracket is very low.
,
【在 t*m 的大作中提到】
: really? I used to live in San Mateo County, and remember CA also have AMT,
: still true?
|
t*m
发帖数: 4414 | 50 thankfully, CA still tax less than IRS
AMT
【在 t***s 的大作中提到】
: yes. and the threhold for top bracket is very low.
:
: ,
|
|
|
c*****x
发帖数: 429 | 51 I contribute to Roth 403b and (traditional) 457b in equal proportion, for
the sole reason of tax diversification: too much existing asset in tax-
deferred, not enough in after-tax. |
t*m
发帖数: 4414 | 52 don't you put money into roth IRA?
【在 c*****x 的大作中提到】
: I contribute to Roth 403b and (traditional) 457b in equal proportion, for
: the sole reason of tax diversification: too much existing asset in tax-
: deferred, not enough in after-tax.
|
c*****x
发帖数: 429 | 53 Yes, I do. But Roth IRA's annual limit is much lower than 403b and 457b.
【在 t*m 的大作中提到】
: don't you put money into roth IRA?
|
t*m
发帖数: 4414 | 54 true.
what's your tax bracket (federal + state) ?
【在 c*****x 的大作中提到】
: Yes, I do. But Roth IRA's annual limit is much lower than 403b and 457b.
|
c*****x
发帖数: 429 | 55 28% federal. State not sure. |
k**g
发帖数: 1558 | 56 Federal amt is 28%, right? Even consider the reduction in exemption,
marginal rate of amt is only 33%
【在 t***s 的大作中提到】
: we are in 35% federal (AMT) and 10.xx% CA. so i guess i'm nuts.
:
: 401K
|
t***s
发帖数: 4666 | 57 28%*1.25=35%.
【在 k**g 的大作中提到】
: Federal amt is 28%, right? Even consider the reduction in exemption,
: marginal rate of amt is only 33%
|
t*m
发帖数: 4414 | 58 not on AMT yet? you are lucky
【在 c*****x 的大作中提到】
: 28% federal. State not sure.
|
P******A
发帖数: 260 | |
M********y
发帖数: 1121 | 60 The company offers both and I can not decide which one to get. The marginal
federal tax bracket for now will be around 28%-33%. It will be much higher
considering other state and SS taxes. Don't know if the tax rate will get
any higher in the future.
Can anyone share some thoughts? Thank you! |
|
|
Q***u
发帖数: 433 | 61 If you're at 28-33% now, I think you'll be better off with traditional 401(k
). You can't predict what the Federal tax brackets are in the future. That's
not what you should worry and it's beyond your control.
What you need to think is the specific income and tax rate when you retire.
If you believe all you earn during retirement is social security, 401(k)
distributions, some investment dividends, and so on, then the chances are
your retirement income will be significantly lower than what you earn now.
That's what matters.
For example, you earn $100k a year now at 28% rate. Even if this rate
increases to 35% in the future, you'll only earn $50,000 a year when you
retire, which will most likely still qualify you for a rate lower than 35%, which
might be 20%. |
M********y
发帖数: 1121 | 62 That's what I was thinking too... Thank you!
(k
's
.
【在 Q***u 的大作中提到】
: If you're at 28-33% now, I think you'll be better off with traditional 401(k
: ). You can't predict what the Federal tax brackets are in the future. That's
: not what you should worry and it's beyond your control.
: What you need to think is the specific income and tax rate when you retire.
: If you believe all you earn during retirement is social security, 401(k)
: distributions, some investment dividends, and so on, then the chances are
: your retirement income will be significantly lower than what you earn now.
: That's what matters.
: For example, you earn $100k a year now at 28% rate. Even if this rate
: increases to 35% in the future, you'll only earn $50,000 a year when you
|
b********k
发帖数: 431 | 63 nice comment, and also diversify the investments, be conservitive on the
retirement plan.
(k
's
.
【在 Q***u 的大作中提到】
: If you're at 28-33% now, I think you'll be better off with traditional 401(k
: ). You can't predict what the Federal tax brackets are in the future. That's
: not what you should worry and it's beyond your control.
: What you need to think is the specific income and tax rate when you retire.
: If you believe all you earn during retirement is social security, 401(k)
: distributions, some investment dividends, and so on, then the chances are
: your retirement income will be significantly lower than what you earn now.
: That's what matters.
: For example, you earn $100k a year now at 28% rate. Even if this rate
: increases to 35% in the future, you'll only earn $50,000 a year when you
|
o******8
发帖数: 620 | 64 This is the best comments I have seen on tax bracket (by a real
person). Thanks!
traditional 401(k
future. That's
when you retire.
401(k)
chances are
you earn now.
this rate
when you
【在 Q***u 的大作中提到】
: If you're at 28-33% now, I think you'll be better off with traditional 401(k
: ). You can't predict what the Federal tax brackets are in the future. That's
: not what you should worry and it's beyond your control.
: What you need to think is the specific income and tax rate when you retire.
: If you believe all you earn during retirement is social security, 401(k)
: distributions, some investment dividends, and so on, then the chances are
: your retirement income will be significantly lower than what you earn now.
: That's what matters.
: For example, you earn $100k a year now at 28% rate. Even if this rate
: increases to 35% in the future, you'll only earn $50,000 a year when you
|
w*****n
发帖数: 19 | 65 由俭入奢易，由奢入俭难。:-)
Your example is way off! :-O
Considering this case here, MyDearBaby might have at least 20-30 years of
work ahead. Let us use 25 years for work life.
If you earn $100k/yr now, what will you salary be after 25 years before
retirement? Still $100k/yr? Even if your salary at that time is still $100k,
would you like to live from a life with a quality of having $100k a year
suddenly to a life with only $50k a year?
Even if you could bear with your income dropped 50%, do you really agree
that your retirement life cost will be lower? Grab some senior friends and
ask them. Medical expenses, Long Term Care, expenses on the second
generation, etc are potential high costs.
If you have $100 now, can you still buy same amount of eggs or gas 25 years
later when you retire? The average inflation rate is 3%. That means 25 years
later, to buy same amount of eggs or gas, you need to have at least $200.
There are general rules for investing for the future:
If you think you live a life better and better, Roth is better;
If you think you live a life worse and worse, traditional is better.
Too much to be covered here. If really interested, send a message/mail to me.
(k
's
.
【在 Q***u 的大作中提到】
: If you're at 28-33% now, I think you'll be better off with traditional 401(k
: ). You can't predict what the Federal tax brackets are in the future. That's
: not what you should worry and it's beyond your control.
: What you need to think is the specific income and tax rate when you retire.
: If you believe all you earn during retirement is social security, 401(k)
: distributions, some investment dividends, and so on, then the chances are
: your retirement income will be significantly lower than what you earn now.
: That's what matters.
: For example, you earn $100k a year now at 28% rate. Even if this rate
: increases to 35% in the future, you'll only earn $50,000 a year when you
|
K****D
发帖数: 30533 | 66 Your point of view does not represent the consensus of the majority
of financial advisors. In fact, deciding or projected tax bracket
(as mentioned earlier in this thread) is indeed a prevailing idea
(especially among American advisors).
The common conclusion is 28% and above marginal tax rate should
definitely go with traditional, while 25% should still consider
going traditional. 15% though, should go with Roth.
Typically life expenses after retirement is significantly lower
than those before retirement -- except maybe for the last couple
of years due to huge medical expenses (for some people). You
already have a paid-for residence. You do not need to support
children's living and education expenses. Those two aspects alone
knocks off a huge chunk of expenses.
100k,
【在 w*****n 的大作中提到】
: 由俭入奢易，由奢入俭难。:-)
: Your example is way off! :-O
: Considering this case here, MyDearBaby might have at least 20-30 years of
: work ahead. Let us use 25 years for work life.
: If you earn $100k/yr now, what will you salary be after 25 years before
: retirement? Still $100k/yr? Even if your salary at that time is still $100k,
: would you like to live from a life with a quality of having $100k a year
: suddenly to a life with only $50k a year?
: Even if you could bear with your income dropped 50%, do you really agree
: that your retirement life cost will be lower? Grab some senior friends and
|
Q***u
发帖数: 433 | 67 First all, those numbers are simply an example. Couldn't believe you're
making such a fuss about those numbers.
Secondly, right now, every month my wife and I put 38% of our earnings into
401(k)'s, Roth IRA's, and 529's. Mortgage and childcare are another $3000 a
month. So, I don't know about you. Based on our current living style, I'm
pretty sure we can live with 50% of our current income during retirement,
knowing that we won't have to worry about mortgage and kids education
anymore. --But that's just me.
100k,
【在 w*****n 的大作中提到】
: 由俭入奢易，由奢入俭难。:-)
: Your example is way off! :-O
: Considering this case here, MyDearBaby might have at least 20-30 years of
: work ahead. Let us use 25 years for work life.
: If you earn $100k/yr now, what will you salary be after 25 years before
: retirement? Still $100k/yr? Even if your salary at that time is still $100k,
: would you like to live from a life with a quality of having $100k a year
: suddenly to a life with only $50k a year?
: Even if you could bear with your income dropped 50%, do you really agree
: that your retirement life cost will be lower? Grab some senior friends and
|
t***s
发帖数: 4666 | 68 a few things to keep in mind.
1. required minimum distribution
2. emergency need
3. rising medical cost
4. uncertainty about future tax rate
5. uncertainty about future availability of roth 401k from your employer
6. effectively more money enjoying the tax benefit for roth 401k
into
a
【在 Q***u 的大作中提到】
: First all, those numbers are simply an example. Couldn't believe you're
: making such a fuss about those numbers.
: Secondly, right now, every month my wife and I put 38% of our earnings into
: 401(k)'s, Roth IRA's, and 529's. Mortgage and childcare are another $3000 a
: month. So, I don't know about you. Based on our current living style, I'm
: pretty sure we can live with 50% of our current income during retirement,
: knowing that we won't have to worry about mortgage and kids education
: anymore. --But that's just me.
:
: 100k,
|
K****D
发帖数: 30533 | 69 Without these things, I would say 100% of people in 15% tax bracket
should stop contributing to 401k (non-matching part).
With these things, I may drop it to 99.9%, hehe.
【在 t***s 的大作中提到】
: a few things to keep in mind.
: 1. required minimum distribution
: 2. emergency need
: 3. rising medical cost
: 4. uncertainty about future tax rate
: 5. uncertainty about future availability of roth 401k from your employer
: 6. effectively more money enjoying the tax benefit for roth 401k
:
: into
: a
|
t***s
发帖数: 4666 | 70 i'm trying to argue for roth 401k. we are in a very high marginal rate
right now, thanks to the amt, but we are still selecting roth 401k.
【在 K****D 的大作中提到】
: Without these things, I would say 100% of people in 15% tax bracket
: should stop contributing to 401k (non-matching part).
: With these things, I may drop it to 99.9%, hehe.
|
|
|
K****D
发帖数: 30533 | 71 Why is that? I just don't understand.
It will be very difficult for most people to have higher marginal
tax rate after retirement than now, AMT or not, even considering
the minimum required distribution.
【在 t***s 的大作中提到】
: i'm trying to argue for roth 401k. we are in a very high marginal rate
: right now, thanks to the amt, but we are still selecting roth 401k.
|
t***s
发帖数: 4666 | 72 historically tax rate has been higher. and certainty about the
tax has value too. and what if you need a lot of money for emergency
purpose in one year? and if you think 401k/ira makes sense, wound't it
make sense to put more money in it? and what if the government stops
the roth all together in the future? what if you change a company
and they don't have roth 401k?
【在 K****D 的大作中提到】
: Why is that? I just don't understand.
: It will be very difficult for most people to have higher marginal
: tax rate after retirement than now, AMT or not, even considering
: the minimum required distribution.
|
Q***u
发帖数: 433 | 73 Uncertainties are uncertainties. Nobody can really predict which way the
uncertainties will go. So, in the end, it all boils down to where each
person stands regarding the uncertainties. I myself still firmly believe
that for most Chinese--who're avid savers compared to Americans--they should
choose the traditional if their current tax bracket is greater than 28%.
But in the end, each person has different risk tolerance, life style, and so
on. So, it's impossible to have a universal answer.
【在 t***s 的大作中提到】
: a few things to keep in mind.
: 1. required minimum distribution
: 2. emergency need
: 3. rising medical cost
: 4. uncertainty about future tax rate
: 5. uncertainty about future availability of roth 401k from your employer
: 6. effectively more money enjoying the tax benefit for roth 401k
:
: into
: a
|
Q***u
发帖数: 433 | 74 For emergency money, I don't believe your 401(k)--Roth or traditional--will
be your sole source of investment. You certainly have other non-retirement
investment, don't you?
401(k) has a yearly contribution limit. Even if I wanted to put more in it,
I'm not allowed to do it.
If your main concern is afraid of losing Roth 401(k) when switching
employers, yeah, then I guess it makes sense to choose Roth since you
like it better.
【在 t***s 的大作中提到】
: historically tax rate has been higher. and certainty about the
: tax has value too. and what if you need a lot of money for emergency
: purpose in one year? and if you think 401k/ira makes sense, wound't it
: make sense to put more money in it? and what if the government stops
: the roth all together in the future? what if you change a company
: and they don't have roth 401k?
|
K****D
发帖数: 30533 | 75 Even if you max out 401k every year, it's still very hard to reach
4 million when you retire. The min distribution on that is probably
$150k max, or a comfortable 25% tax bracket.
Uncertainty is a 双刃剑。Some people may feel more comfortable
to save tax now just because of the uncertainty. You save 28%
up front. That's more certain!
If you care about uncertainty, statistically most people have
lower tax rate after retirement than now. Your odds are not good
betting against it. (i.e. it takes some luck to make it higher,
including the "suddenly need a lot of cash" type of emergency.)
【在 t***s 的大作中提到】
: historically tax rate has been higher. and certainty about the
: tax has value too. and what if you need a lot of money for emergency
: purpose in one year? and if you think 401k/ira makes sense, wound't it
: make sense to put more money in it? and what if the government stops
: the roth all together in the future? what if you change a company
: and they don't have roth 401k?
|
a*****n
发帖数: 5158 | 76
actually not very difficult
老了，就没有dependent,没有杂7杂8 deduction,
tax bracket升上去太easy了
【在 K****D 的大作中提到】
: Why is that? I just don't understand.
: It will be very difficult for most people to have higher marginal
: tax rate after retirement than now, AMT or not, even considering
: the minimum required distribution.
|
K****D
发帖数: 30533 | 77 Well, unless you really have a more than 2 million traditional
401k/IRA account at retirement that triggers huge minimum
required distribution, I wouldn't worry about the tax rate.
I personally put 401k the lowest priority in my portfolio. I want
it to earn as little as possible. For the whole 2010 it was all
cash. For Roth, though, I am often all-in...
【在 a*****n 的大作中提到】
:
: actually not very difficult
: 老了，就没有dependent,没有杂7杂8 deduction,
: tax bracket升上去太easy了
|
t***s
发帖数: 4666 | 78 with roth, effectively you save more with the same annual limit.
will
,
【在 Q***u 的大作中提到】
: For emergency money, I don't believe your 401(k)--Roth or traditional--will
: be your sole source of investment. You certainly have other non-retirement
: investment, don't you?
: 401(k) has a yearly contribution limit. Even if I wanted to put more in it,
: I'm not allowed to do it.
: If your main concern is afraid of losing Roth 401(k) when switching
: employers, yeah, then I guess it makes sense to choose Roth since you
: like it better.
|
t***s
发帖数: 4666 | 79 historically the rate is low right now.
【在 K****D 的大作中提到】
: Even if you max out 401k every year, it's still very hard to reach
: 4 million when you retire. The min distribution on that is probably
: $150k max, or a comfortable 25% tax bracket.
: Uncertainty is a 双刃剑。Some people may feel more comfortable
: to save tax now just because of the uncertainty. You save 28%
: up front. That's more certain!
: If you care about uncertainty, statistically most people have
: lower tax rate after retirement than now. Your odds are not good
: betting against it. (i.e. it takes some luck to make it higher,
: including the "suddenly need a lot of cash" type of emergency.)
|
K****D
发帖数: 30533 | 80 Financial advisors already considered that.
Odds are still against you, hehe.
【在 t***s 的大作中提到】
: historically the rate is low right now.
|
|
|
t***s
发帖数: 4666 | 81 i wouldn't take the words of those financial advisors too seriously.
【在 K****D 的大作中提到】
: Financial advisors already considered that.
: Odds are still against you, hehe.
|
K****D
发帖数: 30533 | 82 I know, but what they say is tax rate will be hiked for high income
people first and the chance for regular people to get hit is very
low. I kinda of believe that.
But you sound like high income people who may get damaged... If so
it's up to you how to estimate the risk leh.
I am the type of guy that likes to pocket profit. If a stock is
high, I sell it. If I can save 25% tax, I save it. All because
of fear for uncertainty in the opposite aspect, hehe.
【在 t***s 的大作中提到】
: i wouldn't take the words of those financial advisors too seriously.
|
t***s
发帖数: 4666 | 83 you and me are already considered high income people by obama.
【在 K****D 的大作中提到】
: I know, but what they say is tax rate will be hiked for high income
: people first and the chance for regular people to get hit is very
: low. I kinda of believe that.
: But you sound like high income people who may get damaged... If so
: it's up to you how to estimate the risk leh.
: I am the type of guy that likes to pocket profit. If a stock is
: high, I sell it. If I can save 25% tax, I save it. All because
: of fear for uncertainty in the opposite aspect, hehe.
|
K****D
发帖数: 30533 | 84 I am in the 15% tax bracket!
【在 t***s 的大作中提到】
: you and me are already considered high income people by obama.
|
t***s
发帖数: 4666 | 85 zan. then you really should do roth.
【在 K****D 的大作中提到】
: I am in the 15% tax bracket!
|
S**C
发帖数: 2964 | 86 My take is to have a healthy dose of ROTH to diversify tax risk. I think 20%
-30% ROTH in total retirement asset is nice to have. Without RMD, and
without incurring large tax bill when emergency comes. |
K****D
发帖数: 30533 | 87 Of course, no brainer even for a traditional 401k advocate, lol.
Only if my employer provides me a Roth choice...
【在 t***s 的大作中提到】
: zan. then you really should do roth.
|
a*****n
发帖数: 5158 | 88
不理解,
你一口一个将来税低,那干嘛投roth干嘛而不投traditional ira?
【在 K****D 的大作中提到】
: Well, unless you really have a more than 2 million traditional
: 401k/IRA account at retirement that triggers huge minimum
: required distribution, I wouldn't worry about the tax rate.
: I personally put 401k the lowest priority in my portfolio. I want
: it to earn as little as possible. For the whole 2010 it was all
: cash. For Roth, though, I am often all-in...
|
K****D
发帖数: 30533 | 89 Because my tax rate is 15%.
Even if 25%, I would still go with Roth IRA, because it has some
many other nice features that a traditional cannot match.
I don't think anybody at 28% or above tax rate can still contribute
to Roth. So basically my conclusion is:
1) everybody should do Roth as long as they can.
2) If they can't, they should always do Traditional IRA. They can't
just do nothing and waste the quota!
【在 a*****n 的大作中提到】
:
: 不理解,
: 你一口一个将来税低,那干嘛投roth干嘛而不投traditional ira?
|
s**********d
发帖数: 36899 | 90 算税率的时候要算回头退休了你expect每年收入多少。
另外记得你可以搬到税低或没有的地方减掉州税。 |
|
|
Q***u
发帖数: 433 | 91 I wholeheartedly agree with this. My wife and I have had two Roth IRA's
since 2000, which now accounts of 24% of our total retirement saving. I was
thinking to use them to hedge against any of those future "uncertainties"...
20%
【在 S**C 的大作中提到】
: My take is to have a healthy dose of ROTH to diversify tax risk. I think 20%
: -30% ROTH in total retirement asset is nice to have. Without RMD, and
: without incurring large tax bill when emergency comes.
|
Q***u
发帖数: 433 | 92 Are you kidding me?? :|
After all these talks, I thought you were a millionaire! :P
【在 K****D 的大作中提到】
: I am in the 15% tax bracket!
|
k***u
发帖数: 176 | 93 我顺路问个问题,Married file jointly 是每人可以存5000ROTH, 对吧?
【在 K****D 的大作中提到】
: Because my tax rate is 15%.
: Even if 25%, I would still go with Roth IRA, because it has some
: many other nice features that a traditional cannot match.
: I don't think anybody at 28% or above tax rate can still contribute
: to Roth. So basically my conclusion is:
: 1) everybody should do Roth as long as they can.
: 2) If they can't, they should always do Traditional IRA. They can't
: just do nothing and waste the quota!
|
a**r
发帖数: 661 | 94 he is in 15% bracket does not mean his income is low.
【在 Q***u 的大作中提到】
: Are you kidding me?? :|
: After all these talks, I thought you were a millionaire! :P
|
t*m
发帖数: 4414 | 95 in fact, many people spend more money after retirement.
Since no need to work anymore, they go out and have fun (cost $$$) all day
long.
3000
m
,
【在 t***s 的大作中提到】
: a few things to keep in mind.
: 1. required minimum distribution
: 2. emergency need
: 3. rising medical cost
: 4. uncertainty about future tax rate
: 5. uncertainty about future availability of roth 401k from your employer
: 6. effectively more money enjoying the tax benefit for roth 401k
:
: into
: a
|
t*m
发帖数: 4414 | 96 why still roth 401K?
I am in AMT now (35% federal tax) + 5.3% MA state tax. I feel regular 401K
+ roth IRA is good.
【在 t***s 的大作中提到】
: i'm trying to argue for roth 401k. we are in a very high marginal rate
: right now, thanks to the amt, but we are still selecting roth 401k.
|
t*m
发帖数: 4414 | 97 what percentage of employer only give regular but not roth 401K?
will
,
【在 Q***u 的大作中提到】
: For emergency money, I don't believe your 401(k)--Roth or traditional--will
: be your sole source of investment. You certainly have other non-retirement
: investment, don't you?
: 401(k) has a yearly contribution limit. Even if I wanted to put more in it,
: I'm not allowed to do it.
: If your main concern is afraid of losing Roth 401(k) when switching
: employers, yeah, then I guess it makes sense to choose Roth since you
: like it better.
|
t*m
发帖数: 4414 | 98 He is in AMT. dependent won't result in any deduction.
【在 a*****n 的大作中提到】
:
: 不理解,
: 你一口一个将来税低,那干嘛投roth干嘛而不投traditional ira?
|
t*m
发帖数: 4414 | 99 true
retirement
it
【在 t***s 的大作中提到】
: with roth, effectively you save more with the same annual limit.
:
: will
: ,
|
t*m
发帖数: 4414 | 100 all your income is long-term capital gain?
WOW, you are the man.
【在 K****D 的大作中提到】
: I am in the 15% tax bracket!
|
|
|
K****D
发帖数: 30533 | 101 Nope. I claimed capital loss for the past 3 years.
15% == low income.
【在 t*m 的大作中提到】
: all your income is long-term capital gain?
: WOW, you are the man.
|
t***s
发帖数: 4666 | 102 we are in 35% federal (AMT) and 10.xx% CA. so i guess i'm nuts.
401K
【在 t*m 的大作中提到】
: why still roth 401K?
: I am in AMT now (35% federal tax) + 5.3% MA state tax. I feel regular 401K
: + roth IRA is good.
|
t***s
发帖数: 4666 | 103 a lot. probably majority of the employers.
【在 t*m 的大作中提到】
: what percentage of employer only give regular but not roth 401K?
:
: will
: ,
|
Q***u
发帖数: 433 | 104 That's what I thought, too. Don't count on many small businesses, for example,
to offer Roth 401k because of the added administrative cost.
【在 t***s 的大作中提到】
: a lot. probably majority of the employers.
|
t*m
发帖数: 4414 | 105 CA has tax bracket. MA is flat 5.3%.
in the end, the marginal tax rate will be similar.
【在 t***s 的大作中提到】
: we are in 35% federal (AMT) and 10.xx% CA. so i guess i'm nuts.
:
: 401K
|
t***s
发帖数: 4666 | 106 not really. for practical purpose, you can just think CA tax rate is
flat 10%.
【在 t*m 的大作中提到】
: CA has tax bracket. MA is flat 5.3%.
: in the end, the marginal tax rate will be similar.
|
t*m
发帖数: 4414 | 107 really? I used to live in San Mateo County, and remember CA also have AMT,
still true?
【在 t***s 的大作中提到】
: not really. for practical purpose, you can just think CA tax rate is
: flat 10%.
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t***s
发帖数: 4666 | 108 yes. and the threhold for top bracket is very low.
,
【在 t*m 的大作中提到】
: really? I used to live in San Mateo County, and remember CA also have AMT,
: still true?
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t*m
发帖数: 4414 | 109 thankfully, CA still tax less than IRS
AMT
【在 t***s 的大作中提到】
: yes. and the threhold for top bracket is very low.
:
: ,
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c*****x
发帖数: 429 | 110 I contribute to Roth 403b and (traditional) 457b in equal proportion, for
the sole reason of tax diversification: too much existing asset in tax-
deferred, not enough in after-tax. |
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t*m
发帖数: 4414 | 111 don't you put money into roth IRA?
【在 c*****x 的大作中提到】
: I contribute to Roth 403b and (traditional) 457b in equal proportion, for
: the sole reason of tax diversification: too much existing asset in tax-
: deferred, not enough in after-tax.
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c*****x
发帖数: 429 | 112 Yes, I do. But Roth IRA's annual limit is much lower than 403b and 457b.
【在 t*m 的大作中提到】
: don't you put money into roth IRA?
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t*m
发帖数: 4414 | 113 true.
what's your tax bracket (federal + state) ?
【在 c*****x 的大作中提到】
: Yes, I do. But Roth IRA's annual limit is much lower than 403b and 457b.
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c*****x
发帖数: 429 | 114 28% federal. State not sure. |
k**g
发帖数: 1558 | 115 Federal amt is 28%, right? Even consider the reduction in exemption,
marginal rate of amt is only 33%
【在 t***s 的大作中提到】
: we are in 35% federal (AMT) and 10.xx% CA. so i guess i'm nuts.
:
: 401K
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t***s
发帖数: 4666 | 116 28%*1.25=35%.
【在 k**g 的大作中提到】
: Federal amt is 28%, right? Even consider the reduction in exemption,
: marginal rate of amt is only 33%
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t*m
发帖数: 4414 | 117 not on AMT yet? you are lucky
【在 c*****x 的大作中提到】
: 28% federal. State not sure.
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P******A
发帖数: 260 | |
m****a
发帖数: 2593 | 119 The Case Against Roth 401(k)
http://thefinancebuff.com/case-against-roth-401k.html
【在 K****D 的大作中提到】
: Your point of view does not represent the consensus of the majority
: of financial advisors. In fact, deciding or projected tax bracket
: (as mentioned earlier in this thread) is indeed a prevailing idea
: (especially among American advisors).
: The common conclusion is 28% and above marginal tax rate should
: definitely go with traditional, while 25% should still consider
: going traditional. 15% though, should go with Roth.
: Typically life expenses after retirement is significantly lower
: than those before retirement -- except maybe for the last couple
: of years due to huge medical expenses (for some people). You
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