No. of Recommendations: 1
>>>The plans at work have taxes deferred, but when you take the money out you must pay the taxes eventually.
A Roth with no taxes ever, if you follow the rules, is a real godsend<<<

I don't believe this is strictly correct.

Case 1: pay tax (rate=it) on principal= P and contribute to Roth earning return=r. at the end of n years, one has amount ((1-it)*P)*(1+r)^n.

Case 2 defer taxes until year n. then the amount is

As Pixy and others have pointed out, these amounts are identical (algebraically equivelant).

Assuming future tax rates are higher, tips the balance towards the Roth.

Assuming future tax rates are lower (which might well be the case for someone now in high marginal rate stage of career) the traditional IRA or 401K wins.

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