Thoughts on IRAs and 401k's for high income individuals, Part 3

Having written two posts about the relative pros and cons of IRA, Roth IRA, 401k and Roth 401k, in this post, I will try to give a somewhat comprehensive summary.

	IRA	Non-deductible IRA	Roth IRA	401k	Roth 401k
Contribution limit	5k	5k	5k	17k	17k
Income phase out start	56k	N/A	110k	N/A	N/A
Income cap	66k	N/A	120k	N/A	N/A
Withdrawal Tax after 59.5	Entirity	Earning only	Free	Entirity	Free
Early withdrawal penalty (In addition to normal tax)	10%	10% on earning	Free after 5 years	10%	10% pro-rata

Personally, I'd maximize the Roth options of both as they are more flexible when it comes to early withdrawal, and they effectively increase the amount of money that you have which is tax-free! A simple calculation for maximizing IRAs that assumes 8% annual return, 30 years time frame, 28% federal tax and 2% state tax shows the following result:

	IRA	Roth IRA
Contribution (after tax)	105000 (After tax equivalent)	150000
Ending balance	566416 + (150000-105000) = 611416	566416
Tax due	566416 * 0.3 = 169924.8	0
Total after tax	441491.2	566416

The traditional IRA's total asset after 30 years plus the sum of tax savings every year is only about 78% of the Roth IRA's total asset.
The situation is similar for 401k and Roth 401k.