Comments on: Commutative Law of Multiplication http://thefinancebuff.com/2007/06/commutative-law-of-multiplication.html like a friend telling you about money ... Thu, 19 Nov 2009 19:44:17 -0600 http://wordpress.org/?v=2.8 hourly 1 By: TFB http://thefinancebuff.com/2007/06/commutative-law-of-multiplication.html/comment-page-1#comment-554 TFB Mon, 31 Mar 2008 22:16:00 +0000 http://blog.thefinancebuff.com/?p=126#comment-554 Kyle - I hear you. The contribution limit is a problem, but only if you hit the limit. If contributing to a Roth IRA means contributing more, you can also increase the contribution to the traditional 401k instead. According to this <a HREF="https://institutional.vanguard.com/VGApp/iip/site/institutional/researchcommentary/article?File=CRR_HowAmericaSaves08" REL="nofollow" rel="nofollow">study by Vanguard</a>, only 10% of people max out their 401k. If you are one of the 10%, then yes, Roth means you can contribute more. For the other 90%, instead of contributing to Roth, they can also increase their 401k contributions. Then this math law applies. Kyle – I hear you. The contribution limit is a problem, but only if you hit the limit. If contributing to a Roth IRA means contributing more, you can also increase the contribution to the traditional 401k instead. According to this study by Vanguard, only 10% of people max out their 401k. If you are one of the 10%, then yes, Roth means you can contribute more. For the other 90%, instead of contributing to Roth, they can also increase their 401k contributions. Then this math law applies.

]]> By: kyle http://thefinancebuff.com/2007/06/commutative-law-of-multiplication.html/comment-page-1#comment-553 kyle Mon, 31 Mar 2008 18:21:00 +0000 http://blog.thefinancebuff.com/?p=126#comment-553 I disagree with your application of the commutative law to IRAs.<br/><br/>You're forgetting the effect of contribution limits. By using a Roth IRA you can pay the taxes from your other income, effectively increasing the amount you can contribute. If you put the money in a traditional IRA, on the other hand, you may end up paying taxes the taxes from your distributions if you don't other income to pay them. I disagree with your application of the commutative law to IRAs.

You're forgetting the effect of contribution limits. By using a Roth IRA you can pay the taxes from your other income, effectively increasing the amount you can contribute. If you put the money in a traditional IRA, on the other hand, you may end up paying taxes the taxes from your distributions if you don't other income to pay them.

]]> By: Anonymous http://thefinancebuff.com/2007/06/commutative-law-of-multiplication.html/comment-page-1#comment-175 Anonymous Wed, 27 Jun 2007 12:31:00 +0000 http://blog.thefinancebuff.com/?p=126#comment-175 Thank you for this post. The Simple Dollar is, for whatever reason, a very popular sight despite the fact that (1) his posts usually lack content and (2) when he does have something, he often gets it wrong. I've followed his logic with squinted eyes since the get-go.<br/><br/>That said, I have enjoyed your postings. Relevant and factual. And you don't feel some mandate to have six posts a day just to have six posts. Keeps it 'simple'.<br/><br/>-Mike Thank you for this post. The Simple Dollar is, for whatever reason, a very popular sight despite the fact that (1) his posts usually lack content and (2) when he does have something, he often gets it wrong. I've followed his logic with squinted eyes since the get-go.

That said, I have enjoyed your postings. Relevant and factual. And you don't feel some mandate to have six posts a day just to have six posts. Keeps it 'simple'.

-Mike

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