Roth IRA vs Traditional

[Raybyrnes]

bob2007

Higher income earners are not eligible for the traditional IRA. But yes if I am Kobe Bryant for example I will make more while working and probably less later on on life. Again I think the cut off is around 70 K

[Raybyrnes]

flu

I don’t agree with the the thought process that the government is going to claw back at the Roth but if this were the logic used than it would be an acceptable reason to go with the Traditional. Similarly if someone were to argue that they thought taxes would actually be lower (i don’t agree with this ) than that too would be an acceptable reason.

My beef is that when they say they are savings person money by going with the Traditional, that is where I have to raise the Bullshit flag. Based on the scenarios they not only are NOT saving their clients money they are costing them money and even after putting it on spread sheet for one they still didn’t get it.

My take is that you have button ushers who can input the data but have no real understanding of the actual products.

[Raybyrnes]

flu

I don’t agree with the the thought process that the government is going to claw back at the Roth but if this were the logic used than it would be an acceptable reason to go with the Traditional. Similarly if someone were to argue that they thought taxes would actually be lower (i don’t agree with this ) than that too would be an acceptable reason.

My beef is that when they say they are savings person money by going with the Traditional, that is where I have to raise the Bullshit flag. Based on the scenarios they not only are NOT saving their clients money they are costing them money and even after putting it on spread sheet for one they still didn’t get it.

My take is that you have button ushers who can input the data but have no real understanding of the actual products.

[Raybyrnes]

flu

I don’t agree with the the thought process that the government is going to claw back at the Roth but if this were the logic used than it would be an acceptable reason to go with the Traditional. Similarly if someone were to argue that they thought taxes would actually be lower (i don’t agree with this ) than that too would be an acceptable reason.

My beef is that when they say they are savings person money by going with the Traditional, that is where I have to raise the Bullshit flag. Based on the scenarios they not only are NOT saving their clients money they are costing them money and even after putting it on spread sheet for one they still didn’t get it.

My take is that you have button ushers who can input the data but have no real understanding of the actual products.

[Raybyrnes]

flu

I don’t agree with the the thought process that the government is going to claw back at the Roth but if this were the logic used than it would be an acceptable reason to go with the Traditional. Similarly if someone were to argue that they thought taxes would actually be lower (i don’t agree with this ) than that too would be an acceptable reason.

My beef is that when they say they are savings person money by going with the Traditional, that is where I have to raise the Bullshit flag. Based on the scenarios they not only are NOT saving their clients money they are costing them money and even after putting it on spread sheet for one they still didn’t get it.

My take is that you have button ushers who can input the data but have no real understanding of the actual products.

[Raybyrnes]

flu

I don’t agree with the the thought process that the government is going to claw back at the Roth but if this were the logic used than it would be an acceptable reason to go with the Traditional. Similarly if someone were to argue that they thought taxes would actually be lower (i don’t agree with this ) than that too would be an acceptable reason.

My beef is that when they say they are savings person money by going with the Traditional, that is where I have to raise the Bullshit flag. Based on the scenarios they not only are NOT saving their clients money they are costing them money and even after putting it on spread sheet for one they still didn’t get it.

My take is that you have button ushers who can input the data but have no real understanding of the actual products.

[PatentGuy]

Agree that the total tax burden will never be zero, but we are talking about a specific tax – income tax – that is levied on distributions from pre-tax plans, such as 401K plans. Property tax, sales tax, gas tax, etc., do not apply (at least not yet) to these distributions.

CA has high gasoline and sales taxes. It has low property taxes IF you just look at the percentage assessed, but plenty high IF you look at the amount paid. We own homes in California and Hawaii of approximately equal value, but the property taxes on our HI house are much lower than in CA.

[PatentGuy]

Agree that the total tax burden will never be zero, but we are talking about a specific tax – income tax – that is levied on distributions from pre-tax plans, such as 401K plans. Property tax, sales tax, gas tax, etc., do not apply (at least not yet) to these distributions.

CA has high gasoline and sales taxes. It has low property taxes IF you just look at the percentage assessed, but plenty high IF you look at the amount paid. We own homes in California and Hawaii of approximately equal value, but the property taxes on our HI house are much lower than in CA.

[PatentGuy]

Agree that the total tax burden will never be zero, but we are talking about a specific tax – income tax – that is levied on distributions from pre-tax plans, such as 401K plans. Property tax, sales tax, gas tax, etc., do not apply (at least not yet) to these distributions.

CA has high gasoline and sales taxes. It has low property taxes IF you just look at the percentage assessed, but plenty high IF you look at the amount paid. We own homes in California and Hawaii of approximately equal value, but the property taxes on our HI house are much lower than in CA.

[PatentGuy]

Agree that the total tax burden will never be zero, but we are talking about a specific tax – income tax – that is levied on distributions from pre-tax plans, such as 401K plans. Property tax, sales tax, gas tax, etc., do not apply (at least not yet) to these distributions.

CA has high gasoline and sales taxes. It has low property taxes IF you just look at the percentage assessed, but plenty high IF you look at the amount paid. We own homes in California and Hawaii of approximately equal value, but the property taxes on our HI house are much lower than in CA.

[PatentGuy]

Agree that the total tax burden will never be zero, but we are talking about a specific tax – income tax – that is levied on distributions from pre-tax plans, such as 401K plans. Property tax, sales tax, gas tax, etc., do not apply (at least not yet) to these distributions.

CA has high gasoline and sales taxes. It has low property taxes IF you just look at the percentage assessed, but plenty high IF you look at the amount paid. We own homes in California and Hawaii of approximately equal value, but the property taxes on our HI house are much lower than in CA.

[PatentGuy]

Bob2007 asks “why not relocate now?”, especially to quit paying high state income taxes. Good question.

I’ve met more than one self-employed professional who maintains their primary residence in NV (or FL) just for income tax reasons, but still spends lots of time in Silicon Valley for work reasons.

But, for now, we are tied to CA. I have a son at SFSU (just finishing his second year), another son is a junior at the local public high school, and my wife teaches in the local elementary district.

Raybyrnes: While none of us know what the government will do, I tend to agree with Flu, and we all seem to agree the government will be desperate for $, and whether they call it a “tax” or a denial of benefits based on ones assets, the result will be the same.

My pre-tax IRA was funded entirely from rollovers of prior-employer 401K and Cash Balance Plans. I “crunched the numbers” and, assuming the respective fed and state governments do not tax the gains or otherwise financially penalize us for having the gains, it was a winner to pay the taxes now IF our combined marginal tax rate at time of distribution was over 33% – BUT depends greatly on how much you predict your gains will be prior to distribution. If you predict higher gains, make more sense to pay taxes now.

[PatentGuy]

Bob2007 asks “why not relocate now?”, especially to quit paying high state income taxes. Good question.

I’ve met more than one self-employed professional who maintains their primary residence in NV (or FL) just for income tax reasons, but still spends lots of time in Silicon Valley for work reasons.

But, for now, we are tied to CA. I have a son at SFSU (just finishing his second year), another son is a junior at the local public high school, and my wife teaches in the local elementary district.

Raybyrnes: While none of us know what the government will do, I tend to agree with Flu, and we all seem to agree the government will be desperate for $, and whether they call it a “tax” or a denial of benefits based on ones assets, the result will be the same.

My pre-tax IRA was funded entirely from rollovers of prior-employer 401K and Cash Balance Plans. I “crunched the numbers” and, assuming the respective fed and state governments do not tax the gains or otherwise financially penalize us for having the gains, it was a winner to pay the taxes now IF our combined marginal tax rate at time of distribution was over 33% – BUT depends greatly on how much you predict your gains will be prior to distribution. If you predict higher gains, make more sense to pay taxes now.

[PatentGuy]

Bob2007 asks “why not relocate now?”, especially to quit paying high state income taxes. Good question.

I’ve met more than one self-employed professional who maintains their primary residence in NV (or FL) just for income tax reasons, but still spends lots of time in Silicon Valley for work reasons.

But, for now, we are tied to CA. I have a son at SFSU (just finishing his second year), another son is a junior at the local public high school, and my wife teaches in the local elementary district.

Raybyrnes: While none of us know what the government will do, I tend to agree with Flu, and we all seem to agree the government will be desperate for $, and whether they call it a “tax” or a denial of benefits based on ones assets, the result will be the same.

My pre-tax IRA was funded entirely from rollovers of prior-employer 401K and Cash Balance Plans. I “crunched the numbers” and, assuming the respective fed and state governments do not tax the gains or otherwise financially penalize us for having the gains, it was a winner to pay the taxes now IF our combined marginal tax rate at time of distribution was over 33% – BUT depends greatly on how much you predict your gains will be prior to distribution. If you predict higher gains, make more sense to pay taxes now.

[PatentGuy]

Bob2007 asks “why not relocate now?”, especially to quit paying high state income taxes. Good question.

I’ve met more than one self-employed professional who maintains their primary residence in NV (or FL) just for income tax reasons, but still spends lots of time in Silicon Valley for work reasons.

But, for now, we are tied to CA. I have a son at SFSU (just finishing his second year), another son is a junior at the local public high school, and my wife teaches in the local elementary district.

Raybyrnes: While none of us know what the government will do, I tend to agree with Flu, and we all seem to agree the government will be desperate for $, and whether they call it a “tax” or a denial of benefits based on ones assets, the result will be the same.

My pre-tax IRA was funded entirely from rollovers of prior-employer 401K and Cash Balance Plans. I “crunched the numbers” and, assuming the respective fed and state governments do not tax the gains or otherwise financially penalize us for having the gains, it was a winner to pay the taxes now IF our combined marginal tax rate at time of distribution was over 33% – BUT depends greatly on how much you predict your gains will be prior to distribution. If you predict higher gains, make more sense to pay taxes now.

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