Start the savings or pay down my student loans?

[isthisused]

If your bracket is 28% or higher I would look for tax avoidance more than "tax me now" plans. No need to do a Roth conversion at 28% when you could do the same conversion in retirement at 15% or 25%.

I intend to max them both out though Im not yet maxxed out on the 401k (15% with 8% match) Do you feel there is an advantage in tax diversification. Some income that is tax deferred and some that are non-taxable?

[noppenbd]

That is a good point as were the points in your earlier post that somehow I didnt read before my post. I do not think he is eligible at this time for a roth but I do believe the income limit goes away in a couple years so the money could be put into a traditional IRA and then converted after the income limit goes away, could it not?? What about the taxing of social security benefits?

· If you file a federal tax return as an “individual,” and your combined income* is between $25,000 and $34,000, you may have to pay taxes on 50 percent of your Social Security benefits. If your combined income* is more than $34,000, up to 85 percent of your Social Security benefits is subject to income tax.
· If you file a joint return, you may have to pay taxes on 50 percent of your benefits if you and your spouse have a combined income* that is between $32,000 and $44,000. If your combined income* is more than $44,000, up to 85 percent of your Social Security benefits is subject to income tax.

If you are relatively young and make average or above income I would assume 85-100% of SS benefits are taxed. Several reasons:

-Numbers you quote above are not indexed for inflation in the tax code, so as inflation rises, more and more people will be above the threshold.
-Tax & SS shortfalls may cause even more taxation of SS, so assume for the worst case.

[jIM_Ohio]

I intend to max them both out though Im not yet maxxed out on the 401k (15% with 8% match) Do you feel there is an advantage in tax diversification. Some income that is tax deferred and some that are non-taxable?

absolutely.
just put the most money where you get the biggest current tax savings at 28 percent fed