I just realized...

[KrazyHorse]

That by opting to contribute to a roth 401k rather than a traditional 401k I can choose to pay relatively similar (risk-adjusted NPV) taxes to either the US or the US/Canada with some probability

Interesting. The bidding will commence immediately.

[Kuciwalker]

Hm? Since you pay taxes on a Roth account now, rather than at withdrawal, wouldn't you necessarily be paying them to the US?

[KrazyHorse]

I think I edited you.

The roth means I pay to the US, the traditional means I may pay to the US or Canada

[KrazyHorse]

The only thing to bear in mind is that pols in Canada might not feel any obligation to not expropriating me in 30 years' time.

Also, I may want to retire to some country that doesn't recognize Roths. Or, that has a dramatically lower tax on income. Or, that doesn't charge capital gains.

So many variables.

[Kuciwalker]

Also, shouldn't you be over the limit anyway?

edit: no need to actually answer this, of course

[KrazyHorse]

What limit? 401ks have no income limit, AFAIK

[Kuciwalker]

Roth eligibility starts phasing out around 100k.

edit: you're married, so ~150k IIRC.

edit2: from wiki

* Single filers: Up to $106,000 (to qualify for a full contribution); $106,000-$121,000 (to be eligible for a partial contribution)
* Joint filers: Up to $167,000 (to qualify for a full contribution); $167,000-$177,000 (to be eligible for a partial contribution)[4]
* Married filing separately (if the couple lived together for any part of the year): $0 (to qualify for a full contribution); $0–$10,000 (to be eligible for a partial contribution).

[KrazyHorse]

That is for IRAs, not 401ks

edit: http://www.irs.gov/retirement/articl...2956,00.html#9

Do the same income restrictions that apply to Roth IRAs apply to designated Roth contributions?

No, there are no limits on an employee’s income in determining if he or she can make designated Roth contributions. Of course, the employee has to have salary from which to make any 401(k) or 403(b) deferrals.

[Kuciwalker]

Oooh, nice. My employer doesn't offer a Roth option (not that that matters for me right now)

[KrazyHorse]

Your employer sucks.

The dilemma I face is the following:

1) I likely face a higher marginal tax rate currently than the effective tax rate I will face in retirement. Therefore I should favour a traditional IRA

2) The contribution limit (16.5k) will begin to bite in 2011, which pushes me toward Roth

3) I am risk averse to upward swings in marginal tax rates. Favor Roth

4) I am risk averse to future rule changes. Favor traditional

[KrazyHorse]

Assuming I work till I'm 50, the current employee match, a 6% real rate of return and withdrawals at 65, I will have 4 mill in 2010 pretax dollars in my retirement accounts when I start withdrawing from them. If I withdraw at 60 I'll have just under 3 mill

That is in addition to whatever non tax-advantaged savings I build up

[DanS]

I try to diversify my retirement accounts to account for some of the variables that you mention, but I don't know what I would do with your two extra options (Canada/US and Roth 401k/traditional 401k). My employer only offers a traditional 401(k), so I also put money in a Roth IRA.

[KrazyHorse]

I try to diversify my retirement accounts to account for some of the variables that you mention, but I don't know what I would do with your two extra options (Canada/US and Roth 401k/traditional 401k). My employer only offers a traditional 401(k), so I also put money in a Roth IRA.

I know a ceiling on your earnings.

I have no option to put in Canadian accounts and receive favourable US tax treatment, AFAIK

[DanS]

It's probably not too tough to figure out my earnings, so I don't mind.

[Arrian]

My company has a roth401(k) option. We ultimately decided that our tax bracket at retirement > our tax bracket now.

You can't know for absolutely sure, of course, but it's probably so.

Our combined income has crept past the Roth IRA limit so that's now out as a hedge.

-Arrian