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Examples for Ongoing Deposits |
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Examples for Ongoing Deposits |
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Examples for Ongoing Deposits
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Examples for Ongoing Deposits |
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Examples for Ongoing Deposits |
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Example #1: Same marginal tax brackets
This analysis compares a $1,000 ongoing contribution where the marginal tax bracket for both accounts is the same.
Prompt |
Value |
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Illustration Type |
Compare deposits to... |
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Date of Birth |
1/1/1960 |
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Retirement Age |
65 |
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Month to Retire |
June |
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Primary Act Type |
401(k) |
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Rate of Return |
6% |
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Tax Bracket |
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Before Retirement |
28% |
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After Retirement |
28% |
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Ongoing Deposits |
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Deposits per Year |
12 |
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Pre-Tax Deposit |
$1,000 |
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Annual Growth in Deposit |
0% |
The after tax values of both accounts will be identical. (As the results are date sensitive, they are not displayed here.)
In the same example as above, increase the before retirement tax bracket to 35%.
The pre-tax qualified plan will be a higher after tax value in retirement than the Roth account.
In the same example as above, return the before retirement tax bracket to 28%, and change the after retirement bracket to 35%.
The Roth account will have a higher after tax value in retirement than the pre-tax qualified plan.