The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: ASquared on December 28, 2013, 12:00:00 AM
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For 2014 we are able to contribute to a Roth, which I assumed would be the best option. However I also know that contributing to a traditional plan would give us a tax benefit of approx 1600. So are we better off to fund the traditional and possibly do a Roth conversion later? Is the tax benefit now worthwhile?
Thank you
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Lots of info on the forums about this topic, here are a few to start you off:
https://forum.mrmoneymustache.com/investor-alley/401k-to-ira-to-roth-and-effective-tax-rates/msg159534/#msg159534
https://forum.mrmoneymustache.com/investor-alley/roth-conversion/msg5812/#msg5812
https://forum.mrmoneymustache.com/investor-alley/where-is-the-cutoff-point/msg187721/#msg187721
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If you are in the 15% Federal tax bracket today, then there might be a case to prefer Roth over traditional. But if you're in the 25% tax bracket then there needs to be some compelling reason to favor Roth. See this blogpost on the topic from the perspective of ER:
http://www.madfientist.com/traditional-ira-vs-roth-ira/