Ask A Question

If you have any questions about the Roth IRA and how it can help you plan for a better retirement, please ask it here.

Lectures are one thing, but the best way to learn is by asking about your situation so the answer is something you know applies to you.

{ 5 comments… read them below or add one }

Dave March 27, 2012 at 12:43 pm

Is there a rule of thumb about what percentage of your savings should be in Roth accounts to minimize your lifetime tax bill (assuming rates stay the same throughout your lifetime)?


Brian March 27, 2012 at 12:48 pm

The Roth is great, but the tax deduction I get on my traditional 401(k) is really nice too.

What if I have higher income? Say I’m in the 28% bracket and have $33K of pre-tax money to put into a retirement account. With a self-employed 401(k) plan I can contribute the full $33K because of the deduction. If that’s a Roth 401(k), I can only put in $17K (which is the Roth limit), pay $4760 on taxes on that money, and then have $11,240 as a profit-sharing which would get a tax deduction. (Though it’s possible I’m mistaken on the second part of that.) That’s nearly $5K *less* in the Roth account today; at 8% for 35 years that means a $70K smaller balance in the Roth when I’m in the early years of retirement.

My question is: what assumptions have to be true to make the Roth a winner?

Assume that I have a separate emergency fund and thus will never need to take advantage of the Roth early withdrawal of contributions rules.


joe April 3, 2012 at 12:30 pm

Brian – Thank you for the question. Visit this Thursday for my answer to you. The book has been ordered for you. Should arrive early next week, enjoy!


Dave March 27, 2012 at 7:06 pm

Are Roth conversions advisable for retired people as a way to reduce estate size?


Dave March 28, 2012 at 1:17 pm

What are the pros and cons of using Roth IRAs to save for your children’s college (as opposed to 529 plans)?


Leave a Comment