re: Bonus at the end of year

quote:

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Roth is better if you are in a lower tax-bracket and expect to have a lower tax rate now than in the future. I'm sure you know that by now.

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I've always heard that, but I don't think it's true.

Oh, it's true if you are close to needing to pull money from it, but not in general.

But even at the highest tax bracket, you'll recoup what was lost within 10 years, assuming inflation and the most conservative growth of stock.

I haven't sat down and did the comparison of the opportunity cost of growth vs having to pay taxes on the growth, but it seems to be that for your 20s and 30s, that maxim does not apply. Put every cent that you can in a Roth, period. Focus more on traditional IRA's later in life, and draw from them first in retirement (after you have drawn down taxable investments) to further increase the advantages of a Roth.