Message Font: Serif | Sans-Serif
No. of Recommendations: 0
can save $1000 pretax, or $700 post-tax, and either way I'll earn 10% compounded while I hold the investment. After 30 years, I'll have $17,449 in the pretax account, or $12,214 in the after-tax account. My understanding is that I'll have to pay cap gains taxes on the after-tax account when I cash out from that account, which would leave me with $9771 cash from that investment. For my pretax account to give me less than that, the tax rate upon withdrawal would have to be 44%, right?

Couple of things. You'll owe earned income taxes on your tax differed accounts when you start with drawls. Assuming no other penalties such as early with drawl.

The main point though. I seriously doubt that 30 years from now we'll be playing by the same tax rules. The best thing you can do is plan like you will be but make changes along the way as the rules change.

Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.