Originally Posted by
UALinIAH
It's not always that simple though. Our youngsters are more often than not better off putting their money in as Roth and taking the tax hit now. 20-30 years of growth tax free more often than not offsets the initial tax hit. Everyone should do your research or spend the $ to get advice on it. When you start getting close to retirement and see how much tax you're going to pay when you do start withdrawing (and the Medicare increase you'll pay) it can be eye opening lol. But these are 1st world problems thankfully.
When you look at required minimum distribution numbers for someone who could realistically have a $10 million+ portfolio after a long career at a legacy, those numbers are pretty staggering and would put you in a high tax bracket. Currently RMDs on $10 million are $377k when they start at age 73 and $625k at age 85- which is going to produce a hefty tax bill. There is a lot of guesswork as to what the future tax code is going to be as well as what inflation does to the tax brackets, but personally I don’t see taxes decreasing in the long run with the way our government spends money.
As someone who was fortunate enough to get hired with the potential of just under 30 earning years, I make Roth contributions to hopefully limit RMDs in retirement to only the company contributions, limiting my future tax liabilities. Obviously you could take this a step further and do a Roth conversion on company contributions to have virtually zero tax liabilities in retirement, however I enjoy spending money on enjoying life now instead of writing a big check to uncle sam every year for the tax bill on the conversion.
Everyone’s situation is different and again it depends on guessing what you think will happen with tax codes in the future, but just wanted to throw another scenario out there.