I would do traditional as long as you can - if your income continues to scale you will lose the ability to do that.
Do traditional as long as I can - why? Because it's able to help me deduct my income tax right?
Here's additional info on my status:
I have no debt. I have zero in my portfolio. I don't have any assets. I've only started reading this forum and only recently maxed my 401k. IRA is the next step for me, and deciding between Roth and Traditional has been my conflict for weeks. I also have about $11,000 in my checking account. $5500 of which I want to take out of there and put it into a IRA for 2014, and maybe a couple thousand to this year's IRA.
$64k - gross income
-$18k - 401k (deductible)
-$5.5k - IRA (deductible only if this is Traditional)
-----
$40.5k - Adjusted Gross Income <------
-$4,050 personal exemption (deductible)
-$6,300 standard deduction, if greater than itemized (deductible)
----
$31,200 - Taxable Income
----
So with my taxable income of $31,200,
I am taxed by the first $9,275 * 0.10 = $927.50
Then $31,200 - $9,275 * 0.15 = $3,288.75
Together with $927.50 = $4,216.25
----
Now, since the brackets go like this:
$0-$9,275 earnings you have by 10%
$9,276-$37,650 by $15%
$37,651-$91,150 by 25%
It doesn't really matter if I deduct the tIRA since I will still be within the 15% tax bracket.
This, along with my goal of maybe buying a house within 3-6 years, can you guys help me determine which to choose given the information?
MDM, I'm not sure what you mean by if I have access to a 401k. I am only 27 and recently just started maxing it out.