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re: Expiration of “Trump” tax cuts
Posted on 5/3/24 at 6:18 pm to SquatchDawg
Posted on 5/3/24 at 6:18 pm to SquatchDawg
quote:
Are you saying the tax deferred is better?
Often, yes. Many people mistakenly compare their top bracket today with their projected top bracket at withdrawal. As I tried to explain in earlier post, traditional withdrawals will usually be taxed at an effective rate lower that is lower because they will fill the lower brackets first (unless you have other income to fill those brackets in retirement.)
My guess is many people have mixed up the advice to fund a Roth IRA after maxing employer plans with the misguided advice that Roth 401k usually beats traditional 401k. Also, much advice is geared to new investors and thus skews to early career relatively lower earning years thus the advice to frontload Roth 401k. It's also a way of oversimplifying so new investors take action instead of getting stuck in analysis paralysis.
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