m...@g...com wrote:
> Hi Joe,
>
> With my 403b contributions, mortgage deduction, etc., I have been in
> the 15% bracket. My wife has not been working so the 401k on her part
> has not been an issue. I would expect she would go back to work part-
> time in a couple of years once my second child is in first grade. I
> don't imagine she will be making a ton at that point either. I have
> about 30K in my 403b at present and as noted have been putting 11% of
> my pre-tax income into it yearly as well as fully funding both my and
> my wife's Roth IRAs. Also putting about 5K yearly into two 529
> plans. Not sure what other numbers you might need.

I think you are on the right track with Roth. This is not a black and
white issue, there is a huge gray area. What I try to help people avoid
is this scenario; Couple in 28% bracket is so fixated on Roth that upon
retiring doesn't have enough pretax saving to come close to 'filling'
the 15% bracket. i.e. a huge missed opportunity, and wasted taxes.
Remember one thing - there is a zero percent bracket. Right now, it's
$17,900 for you and your wife. When you project your pension income, it
may be more than this, so you'll start in the 10% bracket. For those
with no pension, that $17,900 of income would require $447K of (pretax)
savings to generate, assuming a 4% withdrawal rate.
If the missus goes back to work and bops you into the 25% bracket, I'd
suggest tracking your income closely and using regular IRAs to shelter
any money that would be taxed at 25%.
For someone retiring today, my goal would be to keep them in the 15%
bracket. If you can manage the numbers to that while working and then
again at retirement, you'll have done well tax-wise.
(Those who disagree with me will point out that I cannot really know
what the tax structure will be in 2 years let alone 20, and they are
right. I take no offense to that. I offer my opinion given the current
laws and your ability to predict your own income and retirement needs.)
Joe

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