Procedure to determine the optimal Roth IRA versus deductible IRA allocation
DOI:
https://doi.org/10.61190/fsr.v25i4.3229Keywords:
Retirement planning, IRA, Tax ratesAbstract
We offer a procedure to guide the Roth IRA versus deductible IRA (RVD) allocation decision. We require users to input 10 values to generate outputs that include contribution and withdrawal tax rates; maximum gain; and, optimal amount to allocate between the two major IRA types. By being at their optimal RVD allocation, we find that a modest earning couple can achieve a lifetime wealth gain amounting to about $180,000 in today’s dollars. We provide figures and tables illustrating RVD outcomes when there are changes in key variables such as salary match, adjusted gross income, portfolio returns, and withdrawal years.
Downloads
Downloads
Published
Issue
Section
License
Copyright (c) 2014 Academy of Financial Services
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Author(s) retain the copyright and full publishing rights without restriction.
Author(s) grant the Journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-NonCommercial 4.0 International License that allows reusers to distribute, remix, adapt, and build upon the material in any medium or format, for noncommercial purposes only. Reusers must acknowledge the work's authorship and initial publication in this Journal.
Noncommercial means not primarily intended for or directed towards commercial advantage or monetary compensation.
In addition, FSR grants to the UGA Libraries a worldwide, non-exclusive license to all content published by the Journal, including metadata, that is necessary to publish, transmit, and index the Journal and to preserve its content over time.
