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This article makes a major mistake when addressing the benefits of a traditional 401k. When you contribute, you avoid paying taxes at your marginal rate and whe
by jackdeansmith 6y ago
This article makes a major mistake when addressing the benefits of a traditional 401k. When you contribute, you avoid paying taxes at your marginal rate and when you withdraw (for most people at least, who will fund their retirement primarily through 401k withdraw) you pay taxes at your overall rate. The article also treats tax uncertainty as if it only applies to income taxes while it's completely plausible that taxes on capital gains could be increased in the future as well.
- js2 6y agoThe article mentioned the last point: > I understand that you can make the same argument about taxable accounts and a rising capital gains rate. However, I would bet that capital gains rates will remain below ordinary income rates for the foreseeable future.
- aeternum 6y agoAren't 401k withdrawals still taxed as ordinary income? Therefore part or all of it could still be taxed at your marginal rate during retirement, it's just that the marginal rate should in theory be lower during retirement since you have less income.