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Old 02-05-2017, 04:19 PM
 
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If you're in the 25% bracket, the traditional saves you $1375 in taxes so your true OOP on $5500 is $4125. They are basically funding 1/4 of the yearly contribution so I see it as a 33% return asap.
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Old 02-05-2017, 05:13 PM
Status: "Gaining Stability." (set 13 days ago)
 
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I do not qualify for the tax deduction.
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Old 02-05-2017, 06:00 PM
 
Location: Central Massachusetts
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Quote:
Originally Posted by goodlife36 View Post
I do not qualify for the tax deduction.
you do not qualify for the deduction? Please read the bolded statement.

Quote:

Accountholders covered by a retirement plan at work will have their tax-deductible contribution to a Traditional IRA phased-out if:


2016 Traditional IRA AGI Deduction Limits
Filing Status
Single, head of household Full Deduction $61,000 or less Phase-Out $61,000 - $71,000
Married filing jointly Full Deduction $98,000 or less Phase-Out $98,000 - $118,000
Married filing separately Phase-Out Less than $10,000

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Old 02-06-2017, 06:39 PM
Status: "Gaining Stability." (set 13 days ago)
 
5,684 posts, read 5,936,216 times
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Quote:
Originally Posted by golfingduo View Post
you do not qualify for the deduction? Please read the bolded statement.
Thanks for the clarification. I did not see that on the IRS website when I checked initially. I see it now.

I have no idea what I am going to choose.
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Old 02-06-2017, 08:50 PM
 
Location: Central Massachusetts
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Quote:
Originally Posted by goodlife36 View Post
Thanks for the clarification. I did not see that on the IRS website when I checked initially. I see it now.

I have no idea what I am going to choose.
It is your choice but if it were me I would take the deduction today. Since you are still years away from going into retirement in that time frame you might hit the lottery or get offered a 401k. If you do get to the 401k you can roll the money into that from the account you start now. Things could change dramatically and I like the bird in the hand approach.

That being said you now have a lot of information. Use it wisely. Pass it on to your friends. Ask more questions. Stay focused on getting toward your goal.
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Old 02-06-2017, 09:43 PM
 
14,260 posts, read 23,995,588 times
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Quote:
Originally Posted by golfingduo View Post
It is your choice but if it were me I would take the deduction today. Since you are still years away from going into retirement in that time frame you might hit the lottery or get offered a 401k. If you do get to the 401k you can roll the money into that from the account you start now. Things could change dramatically and I like the bird in the hand approach.

That being said you now have a lot of information. Use it wisely. Pass it on to your friends. Ask more questions. Stay focused on getting toward your goal.


Actually, if you hit the lottery, you would wish that you did use the Roth IRA and no RMD would be required.
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Old 02-07-2017, 03:06 AM
 
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my vote is the younger you are the better the odds that your career average tax bracket while ramping up over decades will be lower than your final years .

until they start counting roth income towards all the things linked to retirement i would go roth . there is just so many things tied in at retirement to your income that tax rates can rise and you could still have way more cash flow from a roth .

everything from getting ss taxed , to what you pay for medicare , to dealing with rmd's are some of the things linked .
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Old 02-07-2017, 03:59 AM
 
Location: Central Massachusetts
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Quote:
Originally Posted by jlawrence01 View Post
Actually, if you hit the lottery, you would wish that you did use the Roth IRA and no RMD would be required.
Quote:
Originally Posted by mathjak107 View Post
my vote is the younger you are the better the odds that your career average tax bracket while ramping up over decades will be lower than your final years .

until they start counting roth income towards all the things linked to retirement i would go roth . there is just so many things tied in at retirement to your income that tax rates can rise and you could still have way more cash flow from a roth .

everything from getting ss taxed , to what you pay for medicare , to dealing with rmd's are some of the things linked .
Yes I concur with both of you with a caveat. While Roth are tax free for ever OP's situation is a bit different. OP has no employer sponsored plan. Therefore OP doesn't get the benefit of the most important aspect of retirement savings and that is dollar cost averaging. While that is by itself not enough to make me mad add in the fact that the difference in the amount you can sock away does. We all know 401k rules allow for 3 times the amount that a person can put in an IRA (Roth and or traditional). That is a huge number so it put the OP behind the 8 ball on the start. Add in that the OP is covered with a pension plan his numbers are not as bad as they could be however I advocate living for today as well as saving for tomorrow. Any time I can get a deduction on today's taxes means more money to enjoy life with family. While the Roth might make better sense in the future I am still saying might. I am not convinced that OP's income in retirement will be the same as it is in now. I think OP's income will be a lower tax bracket and low enough that once SS is taken no changes are necessary.
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Old 02-07-2017, 04:28 AM
 
71,626 posts, read 71,751,865 times
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he can dollar cost average in to any number of different tax advantaged funds right in the brokerage account .
if they can utilize zero capital gains brackets , write off losses and pass tax free to heirs anything left or get lower capital gain rates , they may actually come out a head .
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Old 02-08-2017, 07:01 PM
Status: "Gaining Stability." (set 13 days ago)
 
5,684 posts, read 5,936,216 times
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Quote:
Originally Posted by golfingduo View Post
It is your choice but if it were me I would take the deduction today. Since you are still years away from going into retirement in that time frame you might hit the lottery or get offered a 401k. If you do get to the 401k you can roll the money into that from the account you start now. Things could change dramatically and I like the bird in the hand approach.

That being said you now have a lot of information. Use it wisely. Pass it on to your friends. Ask more questions. Stay focused on getting toward your goal.
I appreciate your advice. Thank you so much!
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