No. of Recommendations: 0
"I think there's a little more to it. I have a high income, high tax rate, and I prefer traditional (401k in my case) for the immediate tax savings. Why? I get an immediate tax break at my marginal rate, which is 24% currently - but has been as high as 28% and 33% in recent years."

Same here - not all that long ago....and then add in state taxes.

The year I retired, I made $93K in salary or so. Had another $40k/yr in interest and dividends from investments. My company matched my contributions to the company 401K at 50% up to 6%. I could usually max out at about $9000/yr as a highly compensated employee. Nice to get that company match.....and save tax deferred. Oh, for 10 years I lived in VA and had to pay VA state income tax...what, 5.5%.

if you live in CA, and make $200,000 as a software engineer, but living in your van since you can't afford a $4000/month apartment, between the feds bite and the state bite, you get clobbered. Have non-deferred investments that spin off interest and dividends.....and double ouch!

Yeah, I remember IRAs when they first came out.....all of $1,500 a year and all you have in them was bank CDs.


t
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