Re: Contributing to both the Roth IRA and 401(k)
You last point about changing the taxation rules related to a Roth is an important one. Initially, I believe social security income was exempt from taxes, since you had already paid the income tax on those funds. Then they changed it so you are taxed on these benefits based on your income level.
I do a couple of tax returns for people each year. One is a retired grandma who earns SS and about $18k in interest, dividend and annuity income. She was taxed on about 50% of her SS earnings this year because of her income levels. It's not like she is living the good life.
This will delve into politics, but I'll go there anyway. The way I see it playing out, sometime down the road politicians will say that they are going to make Roth distributions taxable, but only to the rich. Then the thresholds will slowly be reduced over time, making more and more people subject to taxation, much like they have done with SS.
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