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The Free Financial Advisor
The Free Financial Advisor
Business
Brandon Marcus

Roth Contributions in Your Peak Earning Years: The Bracket Math That Can Cost You Thousands in Retirement

Roth Contributions in Your Peak Earning Years: The Bracket Math That Can Cost You Thousands in Retirement
A Roth contribution trades a current-year tax deduction for the possibility of tax-free qualified withdrawals later, making today’s tax bracket an important part of the decision – Shutterstock

Roth contributions can make retirement income tax-free, but that benefit comes with a price today. During peak earning years, that price can land in a much higher federal tax bracket than the one that applies after leaving work.

That makes the Roth decision less about picking a universally superior account and more about comparing two tax bills separated by decades. For a high earner, the difference between paying tax now and claiming a deduction today can reach thousands of dollars.

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