Future Taxes

No one knows what future tax rates are going to be in the future. Everyone, however, knows the tax codes needs to be reformed.

It is no scholar who thinks that future tax rates are likely to be lower while deductions will be less.

How then should you plan for saving in your retirement accounts. Obviously it depends upon your current marginal tax rate vs your future marginal tax rate. One known, one unknown. The thing to remember is that current marginal tax rates are artificially low compared to what they will be in the future. Now while they may drop tax rate levels, with fewer deductions, I suspect future marginal tax rates will be on average higher than today. All of which pitches for the Roth over the tax deferred vehicle.