An option grant where the spread has become large enough that the employee cannot cover the tax burden upon exercise effectively handcuffs said employee to the company until a liquidation event.
Gains in Roth IRAs are also tax free in addition to withdrawals. This means that if you have 30 or more years until retirement, you enjoy a 30 year growth at 8% compounded tax free (based on The numbers in the article). This is why if you're young and qualify for a Roth IRA it's almost always the correct choice.
That doesn't matter. Roth vs. Traditional is purely a bet on current vs. future tax rates.
P = principal,
T_0 = current tax rate,
T_t = Tax rate at retirement (t years in the future).
r = rate of return between time 0 and t
Roth IRA: (P * (1-T_0)) * (1+r)^t
Traditional IRA: (P * (1+r)^t) * (1-T_t)
It's not quite that simple. There is other relevant weirdness in the tax code. Roths are not subject to required minimum distributions and don't count as income during retirement. That can be very useful because a lot of provisions of the tax code phase out as your income rises.
Of course, Congress could also fix that oversight by the time you make it to retirement ...
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August builds products that make life simpler by allowing physical environments to respond seamlessly to people’s behavior. We believe in building quality experiences for our customers through elegance and simplicity. We have a lot planned for the future, and are looking to build a team eager to join the ride. Our software is currently built using Objective C, C, Javascript, Java, MongoDB, Node.JS, and Redis. Our hardware uses Bluetooth 4.0 BLE and ARM microprocessors.
