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Subject:  Re: Before or after tax Dollars Date:  10/6/2013  2:40 PM
Author:  pauleckler Number:  73461 of 88435

The classical answer is that before (deductible IRA or pretax 401k) and after tax (Roth IRA or Roth 401k) are mathematically identical when tax rates are the same now and in retirement.

No one knows what tax rates will be 30 years from now, but generally if your tax rate is low now, after tax Roth could be better. If its high now pretax IRA/401k could be better. Personally I use the 25% fed tax rate as a reference point. Below 25% after tax may be best; above pretax.

Of course the fact that Roth distributions are tax free in retirement, makes Roth the right place to put any investment you expect to do well over the years.
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