"HW "Skip" Weldon" <skip5700removethis[at]hotmail.com> wrote
snip
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moderator, but IMO anyone seeking a financial planner (or similar) should go
looking for someone whose guiding philosophy is like that Mr. Weldon gives
above.

The statements above denote bona fide financial wisdom, transferrable to
life wisdom.

HW \"Skip\" Weldon wrote:

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Good advice on all counts, but it doesn't answer the OP's question.
Unless your answer is, "It doesn't matter."

On 22 Jun 2005 01:20:04 GMT, Will Trice <wwtrice[at]paragondynamics.comwrote:


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Yes and no. It doesn't bother me that investors spend time with this
type of analysis. In fact it probably keeps them out of mischief.
<grin
But I would not want to give them the false sense that their analysis
changes anything. The tax code is one of the most fluid things in
personal finance and, based on its history, cannot not be counted upon
to remain constant. It reminds me of trying to chase a greased pig -
you can't get a handle on it.

So given a choice on how investors spend their time, I'd prefer they
focus instead on living within their means and saving regularly. My
personal opinion is that financial security comes more from HOW MUCH
we save rather than where we save.

Beyond that, take a nap, go fishing, enjoy a walk after dinner, read a
good book, sip a cool one, etc.


-HW "Skip" Weldon
Columbia, SC

zhendsch[at]yahoo.com wrote:

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This is true only if you do not qualify for, or have already maxed out,
a Roth IRA because you could potentially invest your tax savings from
using the regular 401(k) into the Roth.

Has your plan sponsor considered offering the Roth 401k?

Check with your benefits department, from what I'm seeing the adoption of
Roth 401ks will be slow.

HW \"Skip\" Weldon wrote:
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Uncertainty is part of almost every investing decision, is it not? I
decide on asset allocation because of what is happening currently and
what has happened in the past. No guarantee that this asset allocation
will hold in the future. Buying a mutual fund? Could be a stinker.
Buying an individual stock? Even more of a chance (arguably) for a
stinker.

This is why I said that it depends on what you "think" your retirement
rate will be. I do not advocate any fancy analysis for this. After
all, the answer as to which to invest in depends merely on a decision of
[higher, lower, equal], I don't need to know by how much.

So what can we surmise about the future?

An investor planning for retirement should already have a savings goal
in mind, and should know how that translates into an annual income in
today's dollars. Is that significantly higher than today? Do you think
that will put you in a higher tax bracket? Not a tough decision.

Will we have a progressive tax system when you retire (as opposed to a
flat tax or a sales tax or something)? Probably (if you think
otherwise, then this also helps make your decision).

Will current contributions to Roth and traditional IRAs continue with
more-or-less the same tax treatment? Probably.

Will the tax brackets stay the same? There could be more or less
brackets, or the tax rate in each bracket could change (both are almost
certainly true). This is a little tougher and requires some thought.
But a good guess can be made.

What are the consequences of being wrong? Not dire. At worst you will
pay more tax than planned on your withdrawals from a traditional, or
withdrawals from a Roth will become taxable.

So, would you advocate giving this no thought at all and just flipping a
coin?

-Will

joe.spam.weinstein[at]gmail.com wrote:
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IF you are in a situation where you can make the maximum allowed
contribution, you are likely to do much better in the Roth 401K. $15K
after tax is a lot more than 15K before tax, and the larger deferral
amount will be far more important than tax rate differences over long
time periods. If you aren't able to max out your contribution, then it
turns into a guessing game as described by others.

On 21 Jun 2005 01:10:02 GMT, Will Trice <wwtrice[at]paragondynamics.comwrote:


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Besides tax rates, another issue (in choosing between traditional IRA
and Roth) is the future of the current tax rules - not only on
retirement plans, but also on all those other areas that impact
retirement plans. For example, while we are familiar with the CURRENT
tax rules governing contributions to and withdrawals from traditional
and Roth IRAs, we do not know what the FUTURE rules will be.

Based on the amount of change in the tax code over the past few
decades, I have to ask: How practical is it to assume that the tax
rules remain static over the remainder of our lifetimes? And if you
agree with me that it is not practical, then of what real value is all
this analysis?




-HW "Skip" Weldon
Columbia, SC

joe.spam.weinstein[at]gmail.com wrote:
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Your choice will be grossly dependent on what you think your retirement
tax rate will be relative to your current tax rate. This is same as the
dominant factor in deciding between a deductible IRA (when eligible) and
a Roth IRA.

-Will

Hi all. I guess that the specs for ROTH 401Ks are not set yet,
but is there enough defined to discuss how to choose whether
to switch future contributions from a regular 401K to a ROTH
401K?

Joe