I like to get 6/32nd of saddle out of the slot with an action of about 3/32 on the bass side and 2/32 on the treble. This seems to not only give you room to raise or lower the action but leaves a bit of comfort space years down the road should you need to lower the action at the saddle. That's for a 3/8th bridge. I think for a 1/4 in bridge I'd probably only want to get a saddle height of 1/8th.
So for a 1/4in (8/32in) bridge I would measure a straight edge along the fretted fret board right over the saddle location to be 8/32 (bridge) + 4/32(saddle) + 1/32(distortion estimate) = 13/32in.
I really wish I had started building in metric units
