Originally Posted by busdriver12

"A low income individual should bias towards a Roth to minimize the payment of taxes over his/her lifetime. Higher income individuals should be biasing toward taking the deduction now by contributing to a deductible 401K (for example) while their effective tax rate is likely higher, rather than contributing to a Roth now and paying that higher effective tax rate when they could have paid less tax in the future when they're likely making less money during retirement"

If you're a high earner, you should do both the Roth and the 401K. Minimize the taxes you pay now, and minimize the taxes you pay later. If you don't qualify for a Roth, it's easy to contribute to a traditional IRA and convert to a Roth, penalty free, the next day (ie backdoor Roth).

We gave an investor friend less than 20K of our traditional IRA money, 16 years ago. Three years ago, when it was worth 150K, we converted it to a Roth. Sucked up paying 50K in taxes (painful) for the conversion. It's now worth over 300K, and if he continues his annual rate of return of over 18%, (I know, amazing and hard to match, even for Bernie Madoff)...in 20 years, that's about 8 million. Tax free.

If we hadn't sucked up the 50K in taxes, all that money would taxed at the highest tax rate. With all the debt and entitlements this county is going to be paying for, that tax rate is only going straight up.