In my professional opinion, this bit from the Bogleheads wiki is key notion:

*"The main reason to prefer one type of account over the other is the comparison of marginal tax rates. If your marginal tax rate now is higher than your estimated marginal tax rate at retirement, then the traditional account is better; if it is lower, then the Roth account is better."*

What I observe in nearly all of the tax returns I see where people are using Roth's, they don't understand this and go with the Roth when they shouldn't.

I wasn't going to post link to this, but here is the first in a series of blog posts I did to try and explain in very basic way why almost nobody should use a Roth:

Are Roth-IRAs and Roth-401(k) Accounts Really a Good Idea

Yes. It's too bad the first comment to that post promulgates the erroneous "marginal vs. effective" approach. Perhaps you could clarify that that comment is incorrect?

I think it is incorrect. Two examples (one simple and one more complicated) show math.

**The Simple, Zero Investment Earnings Example**

Probably setting the interest rate to 0% makes this easier for some folks to process. E.g., say I have $10,000 of pre-tax income and that I have two choices.

**The Roth Option: **I can report the income on this year's tax return when my rate is (say) 25%... so I'll pay $2500 of tax on the $10,000. But then I'll never have to pay taxes again on that leftover money. That's only $7500 in this case because interest rate is zero. But this shows the math so stay with me...

**The Traditional IRA Option:** I can put money into an IRA and thereby report the income on a future year's tax return when I draw the money out and my rate is (say) 15%... but in that case I'll only pay $1500 of tax on the $10,000. Again, not growth in balance because interest rate equals zero. But you see the basic math.

I will want to pay the $1500 and not the $2500. Which is the same thing as saying pay at the lower marginal rate. Which is the same thing as choosing the traditional IRA because my marginal rate in this example is lower once I retire.

**The Slightly More Complex Example with Investment Earnings**

BTW, if we want to dress this up with some investment income, no problem... suppose this $10,000 will earn 7.2% for ten years thereby doubling in value. Again, I have two choices.

**The Roth option: **I can use a Roth which means I report the $10,000 of income on this year's tax return, pay $2500 in taxes, and let the remaining $7500 go into the Roth and double to $15,000 in ten years... at which point I can draw the money without tax.

**The Traditional IRA option:** I can invest the entire $10,000 into a traditional IRA, let it double in value to $20,000, draw money but pay the 15% tax rate so $3,000, and end up with $17,000.

Again, paying the lower marginal rate (15% instead of 25%) makes a big difference: $15,000 vs $17,000 in this second example.