No. of Recommendations: 1
The 28% now is all you ever pay on the Roth while the 15% in the future is on the inital input and ALL the increase. If you have a 12%
per year overall growth rate it doesn't take many years before the total dollars are quite a bit more with the 401K.


As was pointed out, this is not the correct way to look at it. It's simply stated this way:

For a traditional IRA, your cash in hand after taxes can be stated as
(Contribution x growth rate) x (1-tax rate)

For a Roth IRA, the after tax cash in hand is:
(Contribution x (1-tax rate)) x growth rate

Given the same pre tax contribution, growth rate and tax rate, the two equations are equivalent.

-murray
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