Quote:
Originally Posted by eDave
When you have a moment, would you please expand on this?
Thank you.
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Sure, to really simplify it, if you have 400k in pre-tax/traditional retirement savings. The Fed has a 15% tax rate up to 32k and 23.5% from 32 to 62k.
If you need 45k to live this year, you'll need to pay 13k at the 23.5% rate.
If you have 300k pre-tax and 100k roth, you can use 32k pre-tax and pay 15% then withdraw 13k from your post tax roth money and avoid the higher tax rate.
This can all get into some talk about whether your taxes will be higher now or in retirement in general. I think for regular people this is incredibly hard to answer and that almost everyone should have some both pre and post tax funds for flexibility.
edit: also, these numbers don't make sense lol. It's just the idea that you can avoid higher tax brackets lol