Taxes on retirement - pay now or later?

[moneybags]

hmmm... one person in the discussion at work made the argument that how do we know if Roths will continue to be non-taxable at withdrawal. Everything is changeable with the goverment.

I just don't see them making the contribution portion taxable. It has already been taxed. I know everyone gets freaked out about taxes and possible future taxes, but I don't think this is going to be an issue. JMO.

[MonkeyMama]

As far as the ROTHS possibly disappearing, this is another reason I suggest 50/50. I think it is a very real possibility and there have peen plenty of retroactive tax law changes over the years. I don't really believe that every dollar I put in my ROTH will be "tax free forever." Logistically, I don't think that is going to happen. When/how they change it - lord knows - possibilities are endless.

Of course, you could argue that you should put every dime in your ROTH while you can, because an opportunity like this (tax-free growth and withdrawal) doesn't come along very often. The government may just cut off new ROTH contributions, somewhere along the line.

I personally go for 50/50 because I know that anything can happen. I rather just hedge my bets, than find out my ROTHS are no longer very lucrative after 50 more years of tax code changes.

[nck4857]

If we end up going to a flat tax (or something similar) won't that essentially be a double tax on anything you pull out of your Roth??? I have 30+ years until retirement, I'm gonna keep my stuff diversified both post & pre tax..

[disneysteve]

If we end up going to a flat tax (or something similar) won't that essentially be a double tax on anything you pull out of your Roth???

No. A flat tax wouldn't make any difference as long as the Roth withdrawals remain tax-free.

[jIM_Ohio]

If we end up going to a flat tax (or something similar) won't that essentially be a double tax on anything you pull out of your Roth??? I have 30+ years until retirement, I'm gonna keep my stuff diversified both post & pre tax..

If sales taxes go up, Roth loses some of its value
if income taxes goes up, Roth increases its value