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The point bradt2 is making is that the tax savings you get now for making a traditional IRA (or 401k or 403b) contribution comes at your marginal tax rate, i.e. 28% if you are in that bracket. However, if you are still in the 28% bracket after retirement, not all of your income is taxed at that rate--only the amount over whatever the cut-off is. Your "average" tax rate may actually be around 20% or so, so this is what you should use to compare your traditional IRA vs. a Roth, where you are paying the 28% taxes up front now.

So, if someone is going to be in the 28% tax bracket both before and after retirement, and their rate of return on investment in an IRA is the same as it would be for a Roth (i.e. they are going to invest in the Vanguard Index 500 fund no matter which account they have), doesn't it make sense to pay 20% taxes later (traditional) instead of 28% now (Roth)?

The definition of Marginal Tax Rate is "The amount of tax imposed on an additional dollar of income." If one does not have the IRA income after 65 and he is in a "Marginal Tax Bracket" of 28% then if you add the IRA income it will "all" be taxed at 28% not an average of 15 and 28 %.

Any tax experts out there? Please advise if this is not correct.

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