Thanks for the replies, but I'm still confused.ExRO wrote:*To clarify it for you, your stated aversion to having more than one account will cost you the tax you pay on the earnings attributable to your nondeductible contributions.*This is what I really don't understand. How do the earnings on my future contributions become taxable. I've gone and done a few calculations, and this is what I've come up with. Please point out to me if I've made some mistakes. Here are the specifics:1) I'm 26 years old, planning on retiring when I'm 59 1/2 (for the sake of argument)2) I currently have ~$20,000 in an traditional IRA, which I don't plan on converting to a Roth (I may change my mind on this based on Crosenfield's suggestion that I can do partial conversions).3) I will make additional contributions of $2000 per year until I retire (for a grand total of $70,000).4) I will place all of this money into an S&P index fund, which I asssume will return 12% per year.5) I will be in a 28% tax bracket when I retire.The value of the account (whether traditional only or traditional + Roth) when I retire will be $1.8 mil. The tax I owe assuming I removed it all at once would be1) Traditional only = value (1.8 mil) x basis (20000/70000) x tax rate (.28) = ~$1440002) Traditional + Roth = value of traditional ($940K) x tax rate (.28) = `$264000This looks to me like I wind up better off by keeping the traditional only with nondeductible contributions. Have I made a mistake here?Paul
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |
BATS data provided in real-time. NYSE, NASDAQ and NYSEMKT data delayed 15 minutes.
Real-Time prices provided by BATS. Market data provided by Interactive Data.
Company fundamental data provided by Morningstar. Earnings Estimates, Analyst Ra