Until today, I was investing in traditional 401k. However recently I found out most of my colleagues are investing in Roth 401k. I spoke to them and they were like, it grows tax free and have less restrictions.
Example give by my colleague:
Traditional 401k: Say you invest 100k (pre-tax) and at retirement it is 3x = 300k.. you pay 0% tax, and get 300k in hand Total taxable income: 300k Total tax paid: 300k*.30=90k tax
Roth IRA: Say you invest 100k (post-tax) and at retirement it is 3x = 300k.. you pay 0% tax, and get 300k in hand Total taxable income: 100k Total tax paid upfront: 100k*.30=30k tax
Off course for this calculation, the assumption is your tax bracket remain same, even if it doesn’t taxable income diff is huge.
Wondering what do you guys think about this calculation and what do you guys invest in and why?
Thanks a lot for your time! Appreciate it.
Submitted January 22, 2018 at 09:13AM by hj_mkt http://ift.tt/2DuhvFa
