Roth IRA vs Traditional

[an]

[quote=carlsbadworker]I completely agree with edna_mode. The economists have already been talking about value-added-tax in place of income tax as the way it works in pretty much the entire world. If that happens, there is no tax benefit from Roth anymore. I would caution those who think Roth is definitely better, “tax” diversification is the way to go.[/quote]
It’s one thing to change the rule on new contribution. It’s another thing to change the rule on pre-existing investments/contribution. If it’s that easy for them to change the taxes of pre-existing Roth accounts, wouldn’t that also mean it would be just as easy for them to remove tax benefit of traditional 401k/IRA? They can easily make it all taxable all the time. So, there’s no deferral tax benefit.

BTW, I don’t know about you guys but if everything goes as planned for me, I’ll be much better off when I retire than where I am now. So, even if it’s deferred, I would still be paying more taxes than I do now. I also won’t have kids/house/etc. to write off like I do now. If I’m afraid of them changing tax rule for Roth, I would also be afraid of them changing income tax rule as well.

[carlsbadworker]

They don’t have to change any rules, they just create new taxes that make Roth tax advantage irrelevent (e.g. tied to consumption rather than income). Income tax is not the only way to tax you. If history is any guide, there’re many creative ways to introduce new taxes. In fact, Obama just said he is considering VAT:
http://news.yahoo.com/s/ap/20100421/ap_on_bi_ge/us_obama_tax

[carlsbadworker]

They don’t have to change any rules, they just create new taxes that make Roth tax advantage irrelevent (e.g. tied to consumption rather than income). Income tax is not the only way to tax you. If history is any guide, there’re many creative ways to introduce new taxes. In fact, Obama just said he is considering VAT:
http://news.yahoo.com/s/ap/20100421/ap_on_bi_ge/us_obama_tax

[carlsbadworker]

They don’t have to change any rules, they just create new taxes that make Roth tax advantage irrelevent (e.g. tied to consumption rather than income). Income tax is not the only way to tax you. If history is any guide, there’re many creative ways to introduce new taxes. In fact, Obama just said he is considering VAT:
http://news.yahoo.com/s/ap/20100421/ap_on_bi_ge/us_obama_tax

[carlsbadworker]

They don’t have to change any rules, they just create new taxes that make Roth tax advantage irrelevent (e.g. tied to consumption rather than income). Income tax is not the only way to tax you. If history is any guide, there’re many creative ways to introduce new taxes. In fact, Obama just said he is considering VAT:
http://news.yahoo.com/s/ap/20100421/ap_on_bi_ge/us_obama_tax

[carlsbadworker]

They don’t have to change any rules, they just create new taxes that make Roth tax advantage irrelevent (e.g. tied to consumption rather than income). Income tax is not the only way to tax you. If history is any guide, there’re many creative ways to introduce new taxes. In fact, Obama just said he is considering VAT:
http://news.yahoo.com/s/ap/20100421/ap_on_bi_ge/us_obama_tax

[an]

[quote=carlsbadworker]They don’t have to change any rules, they just create new taxes that make Roth tax advantage irrelevent (e.g. tied to consumption rather than income). Income tax is not the only way to tax you. If history is any guide, there’re many creative ways to introduce new taxes. In fact, Obama just said he is considering VAT:
http://news.yahoo.com/s/ap/20100421/ap_on_bi_ge/us_obama_tax%5B/quote%5D
Ah, OK, you’re saying VAT in replacement of income tax. If they do go that route, then yes, I agree with you. It would totally change the whole landscape and there would be no advantage at all for Roth. I don’t see it happening, but I can be wrong. It still jibe with my philosophy of high risk, high reward(since I’m young). The risk is me paying taxes now and them changing the way they tax the whole country, the reward is, if they don’t do away with income tax, then I’ll be pay A LOT less taxes when I retire.

[an]

[quote=carlsbadworker]They don’t have to change any rules, they just create new taxes that make Roth tax advantage irrelevent (e.g. tied to consumption rather than income). Income tax is not the only way to tax you. If history is any guide, there’re many creative ways to introduce new taxes. In fact, Obama just said he is considering VAT:
http://news.yahoo.com/s/ap/20100421/ap_on_bi_ge/us_obama_tax%5B/quote%5D
Ah, OK, you’re saying VAT in replacement of income tax. If they do go that route, then yes, I agree with you. It would totally change the whole landscape and there would be no advantage at all for Roth. I don’t see it happening, but I can be wrong. It still jibe with my philosophy of high risk, high reward(since I’m young). The risk is me paying taxes now and them changing the way they tax the whole country, the reward is, if they don’t do away with income tax, then I’ll be pay A LOT less taxes when I retire.

[an]

[quote=carlsbadworker]They don’t have to change any rules, they just create new taxes that make Roth tax advantage irrelevent (e.g. tied to consumption rather than income). Income tax is not the only way to tax you. If history is any guide, there’re many creative ways to introduce new taxes. In fact, Obama just said he is considering VAT:
http://news.yahoo.com/s/ap/20100421/ap_on_bi_ge/us_obama_tax%5B/quote%5D
Ah, OK, you’re saying VAT in replacement of income tax. If they do go that route, then yes, I agree with you. It would totally change the whole landscape and there would be no advantage at all for Roth. I don’t see it happening, but I can be wrong. It still jibe with my philosophy of high risk, high reward(since I’m young). The risk is me paying taxes now and them changing the way they tax the whole country, the reward is, if they don’t do away with income tax, then I’ll be pay A LOT less taxes when I retire.

[an]

[quote=carlsbadworker]They don’t have to change any rules, they just create new taxes that make Roth tax advantage irrelevent (e.g. tied to consumption rather than income). Income tax is not the only way to tax you. If history is any guide, there’re many creative ways to introduce new taxes. In fact, Obama just said he is considering VAT:
http://news.yahoo.com/s/ap/20100421/ap_on_bi_ge/us_obama_tax%5B/quote%5D
Ah, OK, you’re saying VAT in replacement of income tax. If they do go that route, then yes, I agree with you. It would totally change the whole landscape and there would be no advantage at all for Roth. I don’t see it happening, but I can be wrong. It still jibe with my philosophy of high risk, high reward(since I’m young). The risk is me paying taxes now and them changing the way they tax the whole country, the reward is, if they don’t do away with income tax, then I’ll be pay A LOT less taxes when I retire.

[an]

[quote=carlsbadworker]They don’t have to change any rules, they just create new taxes that make Roth tax advantage irrelevent (e.g. tied to consumption rather than income). Income tax is not the only way to tax you. If history is any guide, there’re many creative ways to introduce new taxes. In fact, Obama just said he is considering VAT:
http://news.yahoo.com/s/ap/20100421/ap_on_bi_ge/us_obama_tax%5B/quote%5D
Ah, OK, you’re saying VAT in replacement of income tax. If they do go that route, then yes, I agree with you. It would totally change the whole landscape and there would be no advantage at all for Roth. I don’t see it happening, but I can be wrong. It still jibe with my philosophy of high risk, high reward(since I’m young). The risk is me paying taxes now and them changing the way they tax the whole country, the reward is, if they don’t do away with income tax, then I’ll be pay A LOT less taxes when I retire.

[Troubled Loner]

Ray,

You express some doubts as to your mental condition. I don’t know if you are crazy, only a licensed mental health professional can provide that diagnosis. But I will say that in some cases a tradional IRA does make more sense.

I’m a professional tax preparer, and all of my clients’ situations are different. There are many factors, both present and future (way too many to discuss here!), that determine if someone should or should not contribute to a tax deferred retirement acct (i.e a traditional IRA) and/or an after tax acct, such as a Roth IRA. Your tax person should be taking all of these factors into account when discussing this with you. If they do not, then you may not have the right tax guy.

You mention that you think a tax guy “feels that if a client has to pay taxes it reflects poorly on him as opposed to potentially getting a return with the use of a Traditional IRA.” If you believe that all tax pros think this way, then yes, I do believe you are crazy. If this is truly how your tax guy thinks, then, again, you may not have the right tax guy. Competent tax preparers who are looking out for their clients don’t think this way.

[Troubled Loner]

Ray,

You express some doubts as to your mental condition. I don’t know if you are crazy, only a licensed mental health professional can provide that diagnosis. But I will say that in some cases a tradional IRA does make more sense.

I’m a professional tax preparer, and all of my clients’ situations are different. There are many factors, both present and future (way too many to discuss here!), that determine if someone should or should not contribute to a tax deferred retirement acct (i.e a traditional IRA) and/or an after tax acct, such as a Roth IRA. Your tax person should be taking all of these factors into account when discussing this with you. If they do not, then you may not have the right tax guy.

You mention that you think a tax guy “feels that if a client has to pay taxes it reflects poorly on him as opposed to potentially getting a return with the use of a Traditional IRA.” If you believe that all tax pros think this way, then yes, I do believe you are crazy. If this is truly how your tax guy thinks, then, again, you may not have the right tax guy. Competent tax preparers who are looking out for their clients don’t think this way.

[Troubled Loner]

Ray,

You express some doubts as to your mental condition. I don’t know if you are crazy, only a licensed mental health professional can provide that diagnosis. But I will say that in some cases a tradional IRA does make more sense.

I’m a professional tax preparer, and all of my clients’ situations are different. There are many factors, both present and future (way too many to discuss here!), that determine if someone should or should not contribute to a tax deferred retirement acct (i.e a traditional IRA) and/or an after tax acct, such as a Roth IRA. Your tax person should be taking all of these factors into account when discussing this with you. If they do not, then you may not have the right tax guy.

You mention that you think a tax guy “feels that if a client has to pay taxes it reflects poorly on him as opposed to potentially getting a return with the use of a Traditional IRA.” If you believe that all tax pros think this way, then yes, I do believe you are crazy. If this is truly how your tax guy thinks, then, again, you may not have the right tax guy. Competent tax preparers who are looking out for their clients don’t think this way.

[Troubled Loner]

Ray,

You express some doubts as to your mental condition. I don’t know if you are crazy, only a licensed mental health professional can provide that diagnosis. But I will say that in some cases a tradional IRA does make more sense.

I’m a professional tax preparer, and all of my clients’ situations are different. There are many factors, both present and future (way too many to discuss here!), that determine if someone should or should not contribute to a tax deferred retirement acct (i.e a traditional IRA) and/or an after tax acct, such as a Roth IRA. Your tax person should be taking all of these factors into account when discussing this with you. If they do not, then you may not have the right tax guy.

You mention that you think a tax guy “feels that if a client has to pay taxes it reflects poorly on him as opposed to potentially getting a return with the use of a Traditional IRA.” If you believe that all tax pros think this way, then yes, I do believe you are crazy. If this is truly how your tax guy thinks, then, again, you may not have the right tax guy. Competent tax preparers who are looking out for their clients don’t think this way.

[Author]

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