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Nail,

Pixy responded:
<Provided you maintain the same investing discipline in terms of amount as the 401k contributions have imposed on you to date, then IMHO you may do better (in a taxable account)than you will within the 401k.>

<you need to do the returns comparison that I discuss in Step 4 of the 13 Steps to Foolish Retirement Planning.>

I have looked at retirement planning step 4 which assumes that my marginal tax rate is the same now and in retirement (which seems to be a good assumption). The funds available to me now for savings would be taxed at 28% (my marginal tax rate) but even if my marginal tax rate is 28% at retirement time, my overall tax rate will be less won't it? Do your calculations in step 4 assume that i have retirement income other than from the 401k such that my 401k withdrawals will be taxed at marginal rates? I dont know if that will be the case for me or not.


The formula does indeed assume a marginal rate. If you assume only part of your 401k will be taxed at that rate, the analysis will be off somewhat. How far will depend on where your projected taxable income will fall within the bracket.

Regards….Pixy

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