No. of Recommendations: 4
T, you do realize, the main difference in return between a Roth and Traditional IRA is the difference between the tax rate at contribution vs tax rate at distribution? If the tax rates are the same, so is the return.

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. As it stands, my retirement is likely to be funded by withdrawals taxed as income. But I'm ok with that....because even if I look at only the years where we've had $200k+ in income, we don't pay 24-28-30% of that in federal taxes. With the blended rate of various tax brackets, our average tax paid is around 17% of gross. As a percentage of AGI, it's more like 19%. In either case, even if I have a very large draw in retirement, it's likely the tax rate will be lower than the marginal rate when I set the money aside.

In the extremely unfortunate event that accidentally I end up fabulously wealthy, with massive RMDs, and have to pay 30%+ of that in taxes every year....well, I'll just have to find a way to live with my poor life choices. ;)
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