No. of Recommendations: 0
TMF Pixy,

You replied:
"Obviously, you should put in enough to your 401k to ensure you receive the maximum match on your contributions your employer provides."

Without question, one should never refuse free money!

"Beyond those amounts, you may wish to use a Roth IRA for extra money after considering the tax impact of an after-tax contribution."

I read your suggested ideas. I believe you would agree that, for the illustrations, any consideration of state taxes would net to zero (an increase of marginal rates to allow for state taxes on investment would also increase the marginal rate on withdrawal.)

I agree with all the results using these two assumptions:
1. Tax rate declines in retirement.
2. Tax rate remains the same in retirement.

However, I believe the future Gore/ Clinton ticket (Hilary, that is) will further increase my taxes and apply a "means test" before I can collect Social Security. Therefore, all my assumptions for retirement planning include one more provision:
3. Tax rate increases in retirement.

You mentioned in the discussion that, for most people, their marginal tax rate declines when they retire. You also talk about the inability of those people currently in the higher tax brackets to utilize tax deferred vehicles available to those with lesser incomes.

Personally, my family's current marginal taxes will be increasing, and approaching the level where some of these options are phased out. Wanting to "get ahead of the curve," the Roth seems, at the moment, to be a better place to stash savings after the 401k match is fulfilled using my assumptions.

All this thinking leads me to another question:
I have noticed that the well-paid executives at many companies do not contribute to company 401k plans.
What do the rich do to shelter their income?

Thanks,
kjs1

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