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backstage posted:I just found out I'll have the option of a Roth 403(b) next year. I don't think I understand all the permutations of traditional vs. Roth, so I'm not sure what to do about it. I think that if my contributions to the Roth are taxed at the same percentage as my withdrawals from the traditional, there is no difference. But my contributions to the Roth right now would be taxed at my current marginal rate - so if my IRA is my only source of income at retirement, even if my marginal rate is the same then, the overall tax rate is lower. Therefore if this is the scenario I expect, I should use the traditional IRA. Is this right, or am I talking out my rear end? I am nowhere close to maxing out my 403(b) contributions right now, so that's not a factor. Your roth contributions are taxed at your effective rate, not the marginal. Traditional will be taxed at your effective rate when you withdraw it. If your effective rate is higher then you expect it to be when you retire, contribute to traditional accounts. If your effective rate is lower then you expect it to be at retirement (any young person pretty much), contribute to a roth. As a note, if your employer matches you on your roth 403b, your contributions go into the roth but the employer contributions go into a traditional account.
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Dec 14, 2008 21:28
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Strict 9 posted:Unless you have a market timing system that you feel you can rely on, it's really risky to put or take money out of the market just because it feels like the market is due for a correction. In other words, it's always a risky idea. Reliable will never happen with timing the market. If you want high returns, stay where you are. Those long run high returns include all of the busts and booms.
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Oct 21, 2010 07:31
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