[Music] All right, Seth's question is up next. He says, Howdy, theoretically, is there any advantage to filling a tax-deferred bucket if my tax bracket does not justify it? It seems prudent to load up everything in WTH and avoid all taxes come retirement. What do you think? We get this question a lot. A lot of people tell us, Hey, I hear your rule of thumbs, and I know that you say that the dividing line between doing pre-tax and Roth depends on my tax rate. If I'm in the tax situation where I add my marginal federal rate, my marginal state rate, and it's below 25%, I should probably do Roth contributions. And if I add my marginal federal, my marginal state, and it's above 30%, I should look at pre-tax. Well, I'm in the situation where I'm below 25%, and I'm probably going to stay in 25%, and I'm probably not going to move out of that. Should I just do Roth 401k and Roth IRA and HSA and build up the tax-free bucket?

Is there something I'm missing out on? There's something I'm not thinking of when it's raw, tax-free compared to tax-deferred. Yes, Seth, I've said this many times. My favorite of the, if you're naming your favorite children, the Roth is my favorite because it's tax-free, is ideal. We only recommend outside of that when you really get in those high tax rates and you're hoping that there's an arbitrage situation where you're paying highest tax rates right now, but you think when you retire your income's going to drop substantially and you're going to be able to pay at a lower tax rate. But what you're getting to and what Bo is alluding to is that there's another way you get money in these tax-deferred accounts, and it's typically other people's money, meaning your employer, OPMS, this money to you as a match. Now look, I know that, or profit sharing. I know that there's legislation that passed recently that will allow even this money to be Roth.

but tell me in the comments section. I'd be surprised if anybody is actually getting employer money into the Roth yet, and they're getting additional stuff put on their W2 because these are some of the first years you can do it. And I'm telling you, I bet there's not many out there because this is like most of the stuff that's written into some of these new legislations. They sound great, but they're so complex to implement that it takes years for the market to actually get caught up to where you see this actually being a decision point for you. So, I got to think, Seth, most of your tax-deferred money is not going to be your choice. It's just going to be other people's money that gets put in that for you, for your benefit, and you get to maximize that free money and really turn it into your wealth-building process. So, if all the rules of thumb suggest, Hey, continue doing Roth, continue doing Roth, it's not like Seth should forgo the tax-free opportunity in order.

to build tax-deferred. No, that probably doesn't make sense now. There probably is another line of thinking when you think about like Roth versus after-tax, depending on your goals and how you approach that. But specifically for this question, pre-tax versus Roth, I don't think it's crazy. Yeah, tax-deferred has the most issues probably out of the three different account types, you know, tax-free, which is Roth, the after-tax or your brokerage accounts, and then tax-deferred. You feel sad that that tax-deferred sits in third place, but it has a purpose. Like I said, in other people's free money is definitely still a powerful resource in your wealth-building journey. I love it. We're getting some people. My Roth is 401K match is not. No Roth 401K match yet. Um, yeah, so it sounds like not seen a yes. I mean, I don't, this is, this won't be in that part, but it's just like a few years ago. This was a comment that came up a few years ago. The legislation came out.

that your employer could pay back student loan debt tax-free. Um, if they did it, so I immediately researched the way the math works. It's like if you pay someone $5,000 a year, if you pay someone $50,000 a year, they could elect to defer $5,000 of their comp to go pay student loans. So, they're only taxed on 45. It was a great benefit. It was like a huge thing. I looked at, I got both our CPA involved, and you know, and it just got to the point where they're like, Yeah, this thing is so cumbersome. There's not a mechanism to make this. So, I'm sure there's probably some big Fortune 500 company that has a whole department that has figured out, but for most small businesses, these things sound great in the brochure, but the implementation is just almost impossible. I mean, think about the fact of even like Roth and the 10-year rules or IRAs in general. The 10-year inheritance rule. It took them

years to come up with clarification, so some of these things are much easier said than to do. mhm.

Should We Go 100% Roth to Avoid Taxes in the Future?

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