Best to do both and max them out if you can live with the remainder.  

Given that your SS and 401K will be taxed it will be nice to have some income that isn't taxed.  So far my roth will only cover emergencies that won't affect my taxes.

Run the numbers?  LOL.  I run my numbers everyday.

Your math & mechanics are so jacked up that I can't easily (and won’t even try) to decipher where you went wrong, but it starts at the beginning.

You’ve overcomplicated the simple, and oversimplified the complicated.

The only difference between the two accounts lies in the tax treatment at "the end."  As even you stated, the only difference in the numbers is due to taxes, yet you omitted the part where the taxes begin (for the Traditional):  during the distribution/RMD phase.

In this example "the end" is defined as:

a)  After 30 years of investing.
b)  The investor is 70.5 (and RMDs for the Traditional IRA must begin).

Additionally:

c)  Tax rate remains 25% (but doesn’t really matter).
d)  Dividend income is 2.5% (S&P500 average is 2.2% but we'll assume we're investing for a bit more yield in retirement).
e)  Annual RoR is 8%.
f)  Annual contributions remain level at $5,500 even though they could be increased to $6,500 after age 49.
g)  Additionally I'm ignoring the 0.9% Medicare Surcharge and the 3.8% Net Investment Income Tax since they are N/A to most people and hopefully, if those taxes remain in effect (as part of 0bamacare), they'll be indexed to remain N/A for most.

The annual contribution limit for both types of accounts is $5,500, so that amount is contributed to both IRAs.

After 30 years of $5,500/year at 8%/year both IRAs contain $734,075.

The Roth incurs an income tax penalty of $1,375/year.  Remember when I said one of the only ways for Traditional to beat Roth is if one invests the tax savings?  We'll assume you invest your $1,375/year Traditional tax savings in a taxable account.  After 30 years of $1,375/year at 8%/year your taxable account contains $148,750 (principle = $41,250 and taxes on dividends = $9,820).

Investing the tax savings clearly puts the Traditional ahead at retirement:  $882,885 vs. $734,075.

But after retirement, or more correctly, when RMDs from the Traditional must begin is where the difference becomes apparent.

With a Traditional, you must begin your RMDs at 70.5.  The “M” in RMD stands for "minimum" so by definition that is the minimum you must withdraw and thus represents the most tax efficient method for draining your Traditional (apart from the strategy of beginning your distributions at 59.5 in order to reduce your RMDs later on).

Using the IRS RMD Uniform Lifetime Table (which is applicable in most cases) gives us our yearly RMDs and from that the taxes that are due.  Taking the RMDs, investing the after-tax remainder of the RMD and growing the remaining IRA balance and the total of after-tax RMDs at 8% for 47 years (the time you have to empty your IRA) results in a balance of $2.7M in your taxable account (and $0 in your IRA).  Note that this total includes the $148,750 principle and earnings from the your tax savings.

I know the 47 years is somewhat farcical, but it doesn’t really matter:  one could cut the example off after any number of years with the only difference being that your heir(s) would inherit the IRA and be forced to continue the RMDs based on their life expectancy(ies) and pay taxes based on their tax rate(s).

Your minimum (first) RMD is $26,791, which must be added to all other income (i.e. SS, pension(s), etc.) and will be taxed as regular income.  The maximum RMD is just short of $115,000.  Note that there is a 22-year span (age 85-107) in which the RMDs alone will place you in the 25% marginal tax bracket (so that assumption is at least in the ballpark).

Now for the Roth.  What happens to the Roth when you turn 70.5?  Answer:  nothing.  The Roth contains 734,075 tax free $.  It's yours, free and clear.  Sure, there was a $41,250 “penalty” to get here, but you can withdraw it all and buy a house, pass it (tax free) on to your heir(s), or better yet, since there is no requirement to empty the account like there is with a Traditional:  leave it to continue to grow tax free..

Some financial planners consider this to be the biggest and overwhelming advantage of the Roth vs. Traditional.  This tax treatment is especially advantageous if you don't need to make withdrawals from your IRA to meet living expenses.

What is your Roth balance after 47 years:  I’ll just round it off to $12.7M.

What happens to your Roth when you die?  Your heir(s) have 3 (depending on how you look at it) options:

1.  Take a lump sum distribution; since there are no taxes due, the lump sum won't make a painful addition to their income.
2.  Roll the account over into an Inherited Roth and begin taking (tax free) RMDs per the IRS Single Life Expectancy Table by the end of the first year after your death.
3.  Fail to begin RMDs and the account must be emptied by the end of the 5th year after the year of your death.  

To summarize the Roth’s advantage, here’s a roll up:

The principle contributed to both accounts is $165,000.

Over the 30-year accumulation phase, the Roth requires you to pay taxes of $41,250 or, the other way of looking at it is the Traditional you saves you $1,375/year and (in this example) you invest it.

After 30 years at 8% both IRAs contain $734,075; investing the $1,375/year tax savings gives you an additional $148,750 in a taxable account.

With the Roth option you've already paid your taxes ($41,250) and you have the option of withdrawing it tax-free, passing it on to your heir(s) tax-free or leaving the $ invested in the Roth and continue to let it grow tax-free.

With a Traditional IRA you must begin making RMDs and paying taxes.

Over the course of the next 47 years you transfer your Traditional IRA balance to a taxable account, paying $792,128 in taxes and end up with a taxable account balance of $2.7.

After 47 years the Roth hasn't incurred any additional taxes and the account has balance of $12.7M.

This example, like yours, assumes that the tax rate remains the same although it doesn't really matter unless, as previously stated, you can somehow manage to be in a high bracket while accumulating and a low bracket while withdrawing, in which case it may make sense to go Traditional.  Note that in order to be eligible to contribute to a Roth your income must be less than $133K single/$186K MFJ so literally by definition, one cannot be in a "high" tax bracket (at least not higher than 28%) and contribute to a Roth.

If you're betting your tax rate will be significantly lower in the future, then the scale begins to tip in favor of the Traditional but as you can see, it has a long way to go before gaining parity with the Roth.  OTH, if your tax rate decreases moderately, remains the same or increases, the Roth is clearly the winner.

I encourage you to seek additional professional help in running your numbers.

It's great that you run YOUR numbers, but they don't prove anything, run the numbers on the 2 different taxation scenarios, the difference is not that hard to see and understand.

That's a pretty lame cop-out considering I simplified the scenario enough for a pea-brain to understand.

IMHO, you're taking an easy cop-out because you're afraid of the truth. You're right that I've simplified the scenario to make it easy to understand, if you want a more detailed scenario then why not compare the OPs actual scenario?

How have I omitted that? My scenario includes taxation for both examples, and proves that with very few exceptions the taxation is lower for traditional

I'm beginning to wonder if you actually do understand how the tax brackets work.

This is not applicable to the OP's question and unfairly biases things to your line of thinking, there are VERY FEW scenarios where this sort of comparison is actually applicable. See below for further detail.

Once again, not applicable. You're comparing somebody that wishes to maximize their contributions but cannot contribute more than the $5500 trad. IRA limit, which is not applicable to the OP. He has a 401k, and his income does not permit him to max it out.

The ONLY scenario where your comparison makes sense is somebody that does not have a 401k option and they are trying to maximize retirement savings. If you go back and read through my posts in this thread and others you will clearly see that I'm a proponent of utilizing the Roth option to put away "more retirement money" once you're up against the caps. The Op is not yet against the caps so your method of comparison unfairly favors the Roth, when it simply is NOT true.

You can't simply ignore the "tax savings" as you call it, you must account for that tax savings being invested with a traditional approach, and "investing" that tax savings into a taxable account once its already been taxed as income again unfairly biases your argument. With a 401k, as the OP has, that "tax savings" is invested in the 401k itself which is what my scenario compares.

Furthermore, you cannot simply ignore the difference in "value" that the person is giving up to make their retirement contribution. In your scenario, where-in $5500 is invested in the Roth, the earner gives up $5500 in take-home pay, but a person investing $5500 in a traditional IRA is only giving up $4125 in take-home pay. Why not compare equal amounts as I've done?



Is it really that far fetched to believe that people will actually want to take money out of their retirement during retirement? Lets come back to reality here, not many people will have luxury of never drawing money from their IRA/401k. Most realize they will be drawing, and the RMD is most irrelevant to those that will be drawing from their retirement accounts. I don't understand your aversion to using your retirement funds during retirement? The days of a healthy pension from your life-long employer are coming to an end, social security isn't going to amount to squat when I get to retirement, I'm going to have to draw on my 401k and the OP may have to do that same, so RMD aren't necessarily a bad thing.



Especially advantageous? Don't you mean "ONLY advantageous if you don't need to make withdrawals"? In what other situation would it be advantageous to be able to keep your Roth without taking RMDs outside of the situation where you don't need the money?


Ay, yup, suspicion confirmed, you really don't understand the tax-brackets and how they work do you? It's ok, I didn't understand them when I was in my teens and had to look it up. It might behoove you to do that same.

Begins to tip? I think you mean it tips further in the favor of the traditional.

Except for few situations that are not applicable to the OP's, this is untrue, it's actually the reverse.

I'm good, thanks!

ETA, just lost ALL the numbers for the scenario, going to start over and put it on a new response when I finish. Stupid arfcom...

Contribution numbers are arrived at by maintaining the same level of take-home pay while contributing.
Assumptions I’ve made based upon the info the OP gave:
Income is $120k (this makes the eligibility for child tax credit irrelevant, favoring the Roth, a higher income will make it relevant)
Age:42, stopping work at 47, beginning to draw SSI & 401k etc at 62
Op cannot max his retirement accounts, but he can take money from the Roth and put it in his 401k
SSI income: $20,196 (round to $20k to make this easier)
Military pension (op said he has one IIRC): $30k
Assume no private pension (because that is the case for most people)
OP has some Roth from before, and even if he maxes his 401k, he will still be able to make Roth contributions so OP will be able to mix & match in retirement to best advantage the taxes to his favor (as long as he stays over the RMD amount, which shouldn’t be a problem). OP’s Roth contributions from prior to this date are largely irrelevant to the decision the OP makes and will be excluded from the calculations.
Op has no other savings or income streams once he gets to age 62 when he begins to draw (he has to make it 15 years not working).

I will go through several levels of distribution, starting at 4% (most commonly used number to make the money last 30 years, 10% (an un-sustainable level of distribution), and a situation that puts the full amount of the taxation of the 401k distribution into the very same tax-bracket in which it was contributed (25%) by means of other sources of taxable income in addition to the others mentioned

Scenario 1, OP continues maxing Roth for him and his wife, and puts $10k into the 401k
Roth: $11k
401k: $10k
Take-home pay: $120k- $10k – tax - $11k = $80,022.50

At age 47
Roth: $67,296
401k: $61,178

At age 62
Roth: $213,474
401k: $194,067

Income for 4%
Other: $50k – tax = $43,432.50
401k: $7762.68 – 15% tax = $6598.28
Roth: $8538.96
Total: $58,569.74

Income for 10%
Other: $50k – tax = $43,432.50
401k: $19,406.70 – 15% tax = $16,495.70
Roth: $21,347.40
Total: $81,275.60

Income for 25% bracket
Other: $80k-tax= $68,522.50
401k: $19,406.70 – tax = $14,555.03
Roth: $21,347.40
Total: $104,424.93


Scenario 2, OP maxes 401k and put remainder into the Roth
Roth: $5k
401k: $18k
Take-home pay: $120k - $18k – tax - $5k = $80,022.50

At age 47
Roth: $30,589
401k: $110,121

At age 62
Roth: $97,033
401k: $349,322


Income for 4%
Other: $50k– tax = $43,432.50
401k: $13,972.88 – 15% tax = $11,876.95
Roth: $3881.32
Total: $59,190.77

Income for 10%
Other: $50k– tax = $43,432.50
401k: $34,932.20 – tax = $28,789.15 ($25,900 is taxed at 15%, the remaining $9032.20 is taxed at 25%)
Roth: $9703.30
Total: $81,924.95

Income for 25% bracket
Other: $80k-tax= $68,522.50
401k: $34,932.2 – 25% tax = $26,199.23
Roth: $9703.30
Total: $104,424.93


Golly, gee whiz, the same amount... ALL of the tax calculations were done based upon the 2017 tax brackets for MFJ and exclude inflation. As you can see, for the case where the distribution is taken out entirely in the same tax bracket as the contributions were made, they (401k vs Roth) balance perfectly. HOWEVER, if any portion of the distribution cross into a lower tax-bracket the 401k has the advantage. Wrap in the fact that the tax brackets will be adjusted for inflation while your retirement funds "adjustment" is in the ROR, marks up another point for traditional.

The bottom line is this, for a Roth to become advantageous there are only a few situations: #1 if you're already maxing your traditional contributions and wish to contribute more, you may be able to do some level of roth contribution vs traditional (IE, I can do Roth 401k contributions instead of traditional, and the cap is still the same, which lets me put more "value" into the 401k). #2 If you expect to be making MORE, TAXABLE money in retirement than you make now in order to push the taxation of distributions to a higher tax rate than the rate at which Roth contributions would be taxed.

Lets be serious, who has this problem? VERY few people will be making more in retirement than they are now. Most will collect social-security, possibly some form of pension, and make up the difference with 401k or IRA distributions. SSI alone isn't going to push them into the tax-bracket in which they are currently contributing. If they have a pension, that when combined with SSI pushed them into that bracket then I'm pretty jealous because that is one of the MOST GENEROUS pensions I've ever heard of. If ANY part of the 401k distributions cross over the tax-bracket threshold into a lower bracket it is advantageous to have the traditional. It doesn't become disadvantageous to have a traditional UNTIL you consider RMDs, or crossing tax-bracket threshold into a HIGHER tax bracket.

Lastly, to maximize tax-savings, because the OP currently has a mix, and will continue with a mix even if he maxes 401k contributions, as long as his 401k distributions are above the RMD, he can decrease them to keep as much taxable distribution in the lower brackets and make up any financial needs above that with the Roth.

I don't feel bad being confused about what is the better investment option for me at this point.

I'm a numbers guy, when most people sit around and stare at their phones, I sit around and run numbers, scenarios, and musings through my head. I've busted a number of arfcom investing myths this way. No need to worry if it's confusing, because even for me (a guy that likes numbers games) it can be confusing at times.

That being said, the BLUF is this. If you exclude considerations like tax credit eligibility now (or then), flexibility of having the Roth that doesn't require RMDs, contribution limits (which aren't a problem for you right now), and potential changes to tax-rates/brackets, if any 401k distributions in retirement are expected to be in the same tax-bracket as your highest earnings right now, Roth & 401k are exactly equal options by the numbers.

OTOH,
If you need to reduce AGI now to qualify for tax credits etc now, traditional wins. (I wouldn't worry about potential tax credit eligibility during retirement, that is liable to change by the time you get there).
If you don't anticipate tapping into these savings, and you would rather pass them on to your kids then Roth is the likely winner (situationally dependent but I would keep doing what you're doing).
If your expected taxable income streams during retirement are expected to push you into a higher tax-bracket than you're in now, then Roth is a definite winner; if same bracket they're equal so look at the other considerations.
If your expected taxable income streams during retirement are expected to be lower than they are now 401k is the winner (don't forget to account for inflation changing the tax-brackets over time too, $75k income today may be equal to, and taxed the same as $180k income in retirement)
If you need flexibility to be able to manipulate a mix of taxable and non-taxable, then good mix wins. (your Roth is already off to a much higher start because of your years contributing during the military).
If you plan to be debt-free and live out on a modest income in retirement it's most likely that your 401k will be taxed at a lower rate than it would be now if you did Roth.


If you ever want to have something to ponder, think about our current government situation. The government makes things overly confusing, either intentionally or consequentially to make it hard for the layman to understand. That same government is the one that "gave us" the Roth option. Do they really have your best interest at heart? Or are they trying to capitalize on the myth that "a Roth grows tax-free so you have more money at retirement" so they can get their tax-money now instead of later? Think about it, in the years of your highest earning you will have the most to put-back for retirement. If they can convince you that a Roth is a better option they get a win-win, not only do they get the tax money now, but they get it at the highest tax rate you may see during your life.

This article sums up the advantages and disadvantages of a Roth nicely
Advantages:
Flexibility
No mandatory withdrawals
Can still contribute during retirement (if you're earning money)
Disadvantages:
Doesn't reduce income/AGI for tax purposes
Income limits for contributions

Can you find an advantages in your own situation that justifies the potential of giving up tax-savings in the end?

My income stream excluding my IRAs should be above 100K at 65.  
I'll probably stick with what I am doing.  

but the government wanting money immediately cuts two ways.

would the government fuck itself over long term for a short term gain?  You bet it would.

Since this is getting stupid an personal, I'm out.

A numbers guy?  LOL:  I have a BSME and a Masters in Finance and I'm managing a "substantial" portfolio (that I built on military pay) so I have to know fairly accurately what my balances will be and what my RMDs will be when I get there so that I can develop strategies for minimizes my taxes.  The easiest by far is to "Roth all the things."

I posted numbers from a spreadsheet I made specifically for analyzing this scenario and, being a) pretty damn certain before I post anything but b) open-minded enough to double check to make sure I was right and guess what?  I ran across a website with the exact same numbers as I posted.

The bottom line (w/o all of the math) is this:  the only two ways that Traditional will beat Roth is a) if the income reduction from the Traditional moves you into a lower bracket and then you'll save your marginal rate on the amount you were into the bracket, but since we're talking about a $5,500 contribution, that would be a maximum of 25% of $5,500 or the ubiquitous $1,375 in my post; and b) if you know you will be in a much lower tax bracket during your withdrawal phase.

OTH, there are many positives associated with the Roth (don't listen to me and for God's sake don't listen to Sig):  just google it (for example) and you will find that all else equal, the Roth has a much better chance of coming out ahead of the Traditional than the other way around.  Even if it somehow didn't come out numerically ahead, it will still be close and as I outlined, a Roth will give you and your heirs a lot more flexibility.

Good luck, Sylvan (you know I'm sincere when I say that).

In that case, neglecting the anticipated change in the inflation rate (and changes to the tax brackets) the traditional doesn't offer much, except possibly qualifying your for child tax credit etc now (that is a substantial tax credit IMHO). The Roth offers flexibility.

If you want to play the inflation rate/tax-bracket change game, you can try to predict what your highest tax bracket will be in retirement. If tax-brackets mirror a 2.9% annual inflation rate, the 15% tax bracket will cutoff at approximately $146k. If your distributions will land in the 15% bracket traditional will be best for you. If they land in the 25% bracket they will be equal. If they land in the 28% bracket (I suspect that is unlikely based on your numbers) Roth is best only by a small margin.

That being said, with such a high expected income stream not-including your IRAs, it won't take much to push you to the next higher brackets and it's doubtful you'll need to tap into your retirement. You may want to save it for your kids, which makes the Roth more valuable (even if, in the end, the numbers come out slightly in favor of a traditional). I would invest conservatively in the 401k and max your Roth's like you've been doing. The diversified IRA types will give you more options in retirement.

Stupid and personal? You didn't refute a single thing I've said, I didn't direct any personal insults. As a matter of fact, the only thing that I can think you would even take as a personal insult was the comment about the pea-brain which wasn't directed at anybody, merely a statement that you didn't even attempt to comprehend a scenario that I simplified enough that a pea-brain could understand it. You're refusing to carry on a discussion by your own free-will, the only thing insulting is your close-minded refusal to accept the truth.

Yup, get paid very well to be a numbers guy...
Are you implying that that somehow makes you better or more experienced in financials? Just as engineering disaster happen due to engineering negligence and incompetence by engineers, financial disasters can happen by incompetence of financial professionals.


Because the internet is never wrong? At least I posted a link to the website that supports my position. There are hundreds more that I didn't both posting. The advantages and disadvantages of Roths are pretty easily found with very basic searching. I only posted 3rd party articles because you seem to want to fight to the death on an issue that isn't that complicated. I've put all the numbers out there for you and you STILL refuse to believe them. I have no nefarious purposes, I'm simply trying to educate others so they can avoid falling for the myth that I fell for early-on (which thankfully was the best time for me to be investing in a Roth so no harm was done).

I'm sorry but it doesn't work that way, you CLEARLY do not understand taxation and tax-bracket structure.
FTFY

Once again, you're comparing apples and oranges. Contributing equal contributions to a Roth, vs a traditional reduces the take-home pay of the Roth contributor MORE than that of the traditional contributor. Bank-rate's calculator doesn't account for that, they are only looking at the contribution amount. If you are going to make a fair comparison you need to make that comparison where-in both contribution amounts reduce the take-home pay by equal amounts. Isn't that the name of the game; sacrificing as little financial opportunity as you can now in order to get the most into your retirement account? If you want to make unfair comparisons then I'll see your "game" and raise you. I'll contribute the max of $18k to my 401k, and you contribute the max of $5500 to your Roth. Even though I pay taxes on my amount at distribution my account balance is over 3 times that of yours! Check-mate! Nevermind the fact that I gave up an additional $9375 in take-home pay to out-do you, we can just ignore the things we find convenient to ignore.

Yes, yes, that is one of the FEW benefits of a Roth...

That being said, every situation is different, there is no one answer. Roth is good for some people, not so good for others. You can choose to educate yourself and do what is best for your situation, take the advice of an expert that may or may not know what your situation truly is and may or may not have your best interest at heart, or you can just bury your head in the sand and refuse to educate yourself, or look at discussions objectively. Oh, the last option, you could take the advice of a guy that bought into the Roth myth for several years before he realize that it was a myth; he has no reason to steer you astray, he is just trying to educate you so you don't also go astray, then independently verify what he's saying ...

Lastly, there is one other consideration to Roth vs Traditional that I did NOT bring up because I felt it was irrelevant but now that I've put the hard work into putting all the numbers and scenarios out there I'm going to put it here as well. Hopefully this thread can serve to correct many of the misunderstandings once-and-for-all.
State income taxes can also play a role. IE, you live and work in CA now, where state income taxes are nearly 10% but plan to retire to FL where there is no state income tax. Investing in a Roth ensures that you pay state income taxes in CA now, rather than skipping out on paying state income taxes in FL later in life.

Thanks for the detailed info guys I knew generally but not in detail.  I didn't realize you could leave it in if you wanted withou a penalty for the Roth. I assumed the distribution requirements were the same. It's math over the internet calm down, you know who you are.

I'm so mad that neither of you came to an agreement.


Now I have to keep my SEP IRA and Roth IRA open.

Haha, in true arfcom fashion, always get both when given the option....

To be fair though, I think he would easily come to agreement if he would quit arguing and look at what I'm saying. He even linked to a retirement calculator that proves exactly what I'm saying IF you put the right information in. Garbage in, garbage out: use faulty inputs and you get faulty data, which can lead to faulty conclusions.

Joe has $6,000 (pre-tax) that he is trying to decide which way to go. If he takes it as taxable income and goes the Roth route he will be left with $5400 in his Roth. OTOH, if he goes with the traditional he has $6,000 in the account.
Year......Roth.......Trad
0...........5400......6000
30.........54338....60376
after tax54338....54338

Let's take this example and take an IRR of say, 10%, which is roughly what the S&P500 has returned over the last 90 years. After 30 years, that $5400 now becomes $94,226.77 (after it's withdrawn). That $6000 traditional IRA becomes $104,696.41, reduced to $88,991 if only 15% is taken out for taxes. That after tax distribution amount becomes even less if you have more than $38k in reitrement (which you will). $78,522 is what it gets whittled down to in the 25% bracket. So you are willing to avoid paying taxes on an additional $600 of income up front, so you can pay an additional $15,700+ in taxes later?

There is one glaringly HUGE flaw in your logic here. You've withheld taxes from the Roth contribution at the 10% bracket. Because your numbers are for single filers we'll look at that bracket. 10% bracket gets cutoff at $9325 for single. How many people do you know that are making less than $9325 per year and are taking $6000 of their pre-tax dollars and dropping it all into a Roth? I can bet you that the ONLY people doing that are people making an ass-load of unreported income. Nobody living in extreme poverty is dropping the max into a Roth every year.

Lets do realistic comparisons here. A single filer probably has annual household expenses of at least $25k if he is eating Ramen and sleeping on a cot in a basement apartment with no A/C, no internet, no cable, etc. That person could theoretically be making Roth contributions where the taxes are withheld at the 15% bracket. If he were to consider Roth vs traditional and would only weigh putting all his eggs in one basket, and he continued contributing larger amounts to his retirement while staying in the 15% bracket then he would likely come out ahead by contributing to a Roth. As I stated previously, contributing to a Roth is best done in your low-income years, and traditional is best done in your high-income years.

OTOH, how realistic is it for the guy that is squared-away enough to be maxing IRA contributions to never move up the ladder and start earning more money? At some point it's a realistic expectation that he will move into the 25% or even 28% brackets, at which point the traditional is going to start kicking the pants off the Roth. And the fact that he has Roth contributions building up from early in his career means that in retirement he can maximize the tax benefit by keeping his taxable income streams in the lower brackets.

ETA, the example you posted proves my point exactly but it stops one step short of telling the whole story. The example actually proves that for equal tax rates the amount in the end is equal. Equal tax rates =/= equal tax brackets. Because of the scaled tax bracket structure, when making small contributions up-front (Roth) all of the contributions are likely to come out at the same rate (fall within the same bracket) which is the highest tax-bracket you fall within, but on the back-end (traditional) not all of the distributions will be in the highest tax-bracket which will decrease the actual tax rate, even if your highest tax-bracket is the same. This instantly gives an advantage to traditional contributions. It only begins to equal out if you consider social security PLUS additional income streams like pension, etc. At that point it becomes a much more delicate balancing act. In the OP's specific case, because he expects to have a high taxable income stream and the way his current income and portfolio is balance it still favors the Roth. That is an exception for most; his military pension plus social security, plus any other income streams will push his retirement income higher. Not many people will have that generous of retirement income. The days of generous pensions are gone for most. Social security may or may not pay out by the time many of us hit retirement. It's an unfortunate fact.