Right now, about 90% of my qualified retirement money is pre-tax, but my new contributions are going 50/50 to pre-tax and Roth (both a Roth IRA and a designated Roth 403b). I like the idea of Roth money because there are no taxes in the future, no RMD, and I can use the contributions from the Roth IRA as an emergency cash reserve if something bad happens. But in thinking about my tax position, it seems that this is an expensive option. By making Roth contributions, I am foregoing a 22% tax deduction now. But my pre-tax money will mostly be taxed at 12% when I retire. (Even if I withdraw enough plus taxable SS to be in the 22% bracket, the pre-tax money will have an average tax rate of 15% or so.) Even if Congress raises taxes "on the middle class" (which they always promise not to do), I doubt they would double the marginal rates from 10/12 to 20/24, so it seems I am losing money in the long run by making the Roth contributions now instead of pre-tax contributions.
Any thoughts?
