I am already at 35% tax bracket and my accountant said with my networth, I will never need my retirement $$. He said it is better for me to concentrate on putting $$ in Traditional 401K now to minimize taxes NOW rather than using Roth 401K where tax saving benefit will be lost to me now. What should I do? Should I put $ in Traditional or Roth 401k? I imagin I will still be in the highest income bracket when I retire.
Presuming that you expect to be in a high tax bracket when you retire as well, you sound like a perfect candidate for Roth investments. The Roth retirement accounts work best for those who won't need the money in retirement, because those people get the tax-free growth throughout their entire lifetime, as well as tax-free growth for their heirs. There's some estate tax advantages as well, because the income tax is out of your estate before you die. Exception--if you expect to give your retirement plans to charity when you die, you are better off with the traditional plan.
The traditional 401(k) is often recommended when you're in a high tax bracket now and expect to be in a lower tax bracket when you retire. In your case, this does not apply. The statement that you will never need your retirement income is somewhat shortsighted. At some point that money will be distributed and taxed - whether by you (at 70 and 1/2) or the beneficiaries of your estate. If you expect to be in the highest tax bracket when you retire, I would go with the Roth. With the national debt at record levels and a social security system in need of repair, the highest tax bracket could exceed 35% when you retire.
If you will be in the same tax bracket now and when you retire, then a Roth 401k will have the added advantage of tax-free distributions of earnings upon retirement. A Roth 401k will have a mathematical advantage over a traditional IRA if you are young. The Roth 401k also has the advantage of no required minimum distribution at age 70.5. If you have few years to accrue earnings in your retirement accounts, then the traditional 401k and Roth 401k are a tossup, since the taxes are about the same. I vote for a Roth for you. Also, since you are a high income taxpayer, I would invest for capital gains outside of retirement accounts. Long-term capital gains tax rates are much lower, maximum of 15%.
