I was going to give That Guy a similar explanation:

Person A puts $15,500 into a traditional. Person B puts $15,500 into a Roth. Years later, each account has grown to $50,000. But Person A has to pay income taxes on that money, meaning his account is only worth $35,000 or $40,000 after tax. The Roth effectively allows you to put more money in.

“” but $15,500 after-tax is equivalent to about $23,000 pre-tax in a high-tax state like California, meaning the Roth effectively allows you to contribute much more.”

Is based upon flawed logic and is completely incorrect. After tax money is un-impacted by current year taxes. It is pre-tax deductions that reduce your taxes. In short, the tax benefits of Roth are in the future, the tax benefits of traditional are in the present.”

Think of it this way – if you invest the max of $15,500 into a traditional 401(k) this year and then never invest again, and your original investment remains stagnant (grows at 0% – for easier math). In 30 years your account value is $15,500. If you withdraw the entire amount and you’re in the 15% tax bracket your taxes will be $2,325 and you will be left with $13,175 cash to spend.

If instead you originally invested that $15,500 into a Roth 401(k), never invested again and the investment remained stagnant at 0%, after 30 years your account value is $15,500. When you withdraw there are no taxes due so you are left with $15,500 cash.

What WC Varones is saying is that the Roth 401(k) effectively allows you to contribute more money to your 401(k) which will grows tax-deferred.

With equal after-tax investments, returns, and tax rates at contribution and distribution, the Roth and traditional 401(k) accounts are an exact wash. However, putting $15,500 after-tax into a Roth 401(k) compared to putting $15,500 pre-tax into a traditional 401(k) leaves you with a lot more spendable cash at the endgame.

Of course, the Roth 401(k) investment costs you more up front if you make the same contribution because of the lack of a tax break at contribution, but between investing for retirement in a Roth 401(k) and investing for retirement in a taxable account the Roth lets your money grow tax-free.

Normally I’m not a big Jim Cramer fan or a fan of his TV show. But his books are interesting. And his latest book is more about personal finance than stocks (like his last books). I recommend it as a read. I’ve enjoyed it.

” but $15,500 after-tax is equivalent to about $23,000 pre-tax in a high-tax state like California, meaning the Roth effectively allows you to contribute much more.”

Is based upon flawed logic and is completely incorrect. After tax money is un-impacted by current year taxes. It is pre-tax deductions that reduce your taxes. In short, the tax benefits of Roth are in the future, the tax benefits of traditional are in the present.

My mom and dad did it once to TEST the battery, took it in and it was fine, but when it was time to change it later, it had made it to the Time of Snow and Wet…

It’s totally worth the safety and comfort and lack-of-hassle to get my battery professionally replaced, especially as we got a HUGE discount for buying the battery at the place of installment (installation wasn’t free, due to having to remove the tire, but it was a lot quicker, and a lot safer, and we’re assured that it was done properly).

That reminds me, when I installed it, I was in a big hurry so I didn’t fasten the connectors to it as well as I should have!