Augustine wrote:

- quote -

Effective tax rates may be interesting, but it's one's marginal rate
that matters. Since you didn't offer your age, current income (or
bracket), or give any idea of the rate at which you're saving, I
wouldn't argue with your conclusion.
The greater the time until retirement, the more uncertainty there would
be on the ideal mix. Only thing I'd continue to suggest is to continue
to project how much you'd have at retirement. As long as your retirement
bracket appears enough below your current bracket, some pretax savings
is in order. Also - the chance that an under 30 year old work right till
retirement with no period of unemployment or break of some kind is slim.
That break can be used to convert to Roth. It would fit what you
propose, converting the pretax during such a period.
The math does get real easy right before or during retirement.
JOE

On Jan 16, 10:20 am, bo peep <cowartmi...[at]yahoo.com> wrote:
- quote -

This chart doesn't consider the taxes paid by the middle-class.
What's telling is that it all started with only the filthy rich paying
taxes, sometimes de facto confiscation, as can be seen in these
charts. It doesn't show either the effective tax rate, for example
accounting for the AMT that was also supposed to affect the filthy
rich too, but, as always, ends up reaching the middle-class. As you
can see at http://www.cbo.gov/ftpdoc.cfm?index=...e=0&sequence=0
, the effective tax rate for the average income level is increasing,
especially the middle-class.

But, back to the topic, I guess that it's wise to hedge my bets and
use BOTH the traditional AND the Roth 401k at 50/50.

Thanks.

On Jan 16, 10:20 am, bo peep <cowartmi...[at]yahoo.com> wrote:
- quote -

Actually, you're right: http://www.cbo.gov/ftpdoc.cfm?index=...e=0&sequence=3.
Though it's for a short period, it's evident that the middle-class
effective tax rate has decreased slightly overall.

Eye opener indeed.

Thanks.

On Jan 15, 4:56*pm, Augustine <evan...[at]mailinator.com> wrote:
- quote -

That's a common perception, but it is quite wrong. For exxample,
income tax rates are much lower now than they have been at many times
in the past. See http://www.truthandpolitics.org/top-rates.php

Augustine wrote:

- quote -

I wrote about this on my site this month.
http://www.joetaxpayer.com/toomuch.html

The punchline is that this question cannot be answered without more
details, such as age, current income (and tax rate), along with some
SWAG as to your assets at retirement. Looking at current tax rates, it
would take $849K in pretax savings to put you in the 15% bracket at
retirement. So perhaps the deduction while in the 28% or 25% bracket is
still worth it. Throw into the mix the phantom rate caused by gradual
taxation of social security benefits and you have another variable to
consider. A high enough income at retirement puts you beyond that hump
with no real way to avoid it, but if you are right there, then good
Rothing can be beneficial.

I agree that rates are likely to rise, but there will always be a zero
bracket (the sum of standard deduction and exemptions) and some amount
of low bracket(s). And the risk that Roth withdrawal, while not
'taxable', will be part of the equation that makes your social security
taxable*, that would add insult to injury.

JOE
*I don't mean to start such a rumor, but it's one of the concerns of the
truly cynical.

My current employer offers Roth 401k in addition to the regular 401k.
I had read about Roth 401k before and I think that it's a good deal,
considering that taxes are more likely to increase in the future.
After all, successive big-government administrations always increase
taxes and they just don't seem to come significantly down in a
permanent way in other administrations. And, left or right, federal
debt just keeps on rising...

Anyways, I'm leaning towards putting all of my contributions in the
Roth 401k, while the employers match goes to the regular 401k.

What are your thoughts about Roth 401k?

Thanks.