Question
Traditional 401(k) versus Roth 401(k) Musashi has decided to contribute to a savings program. He can open a traditional 401(k) or a Roth 401(k)
Traditional 401(k) versus Roth 401(k) Musashi has decided to contribute to a savings program. He can open a traditional 401(k) or a Roth 401(k) and has determined that he can afford a $10,800 contribution. Musashi's salary is $34,500 per year, and he is in the 25% tax bracket. If Musashi decides to go with a traditional 401(k), his contribution amount will be S And the amount offset via a reduced tax bill will be If, instead, Musashi decides to go with a Roth 401(k), his contribution amount will be S And the amount offset via a reduced tax bill will be [5 Assuming all the same facts, suppose that Musashi decides to open both 401(k) plans, splitting what he can afford to contribute equally between both plans. Under this scenario, Musashi's contribution amount will be 5 And the amount offset via a reduced tax bill will be S When Musashi retires, which plan's monies will he be able to exclude from taxable income?
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