Originally Posted by
Gunfighter
The math is correct, but the equation it solves is not relevant to high income earners. The calculator ignores the upper constraints on contributions limposed by the IRS, nor does it consider the negative consequences of RMDs.
So since you can only contribute 26000 into either 401 as an over 50 year old would it be better to contribute $16380 of your dollars and $9620 taxes not paid (37% of 26000), then put $7000 into a backdoor Roth?
You've now invested
$16,380 of your money, $9620 tax break at the 37% bracket, $7000 into the Roth and paid $2590 in taxes on that Roth backdoor. for a grand total of 25970 out of pocket for $33000 growing tax deferred or not taxed in the end?
I've gone back and forth on rolling over a traditional IRA that has both pre and post tax dollars in it into a Roth IRA. Should have done it in April when the market was down 30%, with the TaxCuts and jobs acts brackets of 2020.
Is it to late?