The problem there is that the same Congress that will want to get their greedy filthy hands on the tax revenues from 401(k) plans will also want to get their greedy filthy hands on your "tax exempt" Roth IRA withdrawals.
I had a financial advisor telling me to do one of those Roth IRA conversions back in the 1990s when the Roth was first established. I came back to him with the following response:
"Why would I pay taxes on a Roth conversion right now if Congress can change the law in the future to tax the Roth IRAs just like regular IRA withdrawals anyway?"
He thought about it for several days, then came back to me and said I was right. From that point forward, he was still a big fan of Roth IRAs as new accounts, but was no longer advising his clients to do a Roth conversion from a traditional IRA. His rationale was the same as mine: There's no need to give up tax-deferred plan contributions you've made in the past in exchange for a tax-exempt withdrawal that may not be there when you retire.
Of course, there were some exceptions to this. He had some "asset-rich" clients who were temporarily out of work who were able to do the Roth IRA conversions in a year when their income put them in a low tax bracket. For these folks it was worth the risk.
-—”Why would I pay taxes on a Roth conversion right now if Congress can change the law in the future to tax the Roth IRAs just like regular IRA withdrawals anyway?”——
I considered that and came to the conclusion that if Congress does go after regular 401 K they will leave Roth alone simply because the “rich” utilize the Roth far more than joe six pack....
No real “evidence” to think that....just a gut feel that congress will protect the rich and gives them an out saying.... See we didn’t touch all 401 K
Also I didn’t convert my regular 401 K just opened up a Roth and split my future contribution 50/50
I forget to add: if congress does try to tax Roth accounts.... You would be penalized twice on you investments... Not saying that they won’t but double dipping on taxing Roth would make them look look like greedy bastards....instead of trying to save the country....
Plus I imagine many in congress have Roth since they can afford to make large contributions to them...
It is probably in their self interest not to tax Roth ....
You know for the “women’s and child” /S
The idea is not to pay taxes. The Roth makes some sense if you have money to contribute while in the 15% tax bracket or below. Or you know in all likelihood that you're going to be in a higher tax bracket when you retire.
My take on tax deferred retirement accounts is to let a person have control of their own retirement account. The average person changes jobs 11 times in their career. Just have the company make a direct deposit into the account. Then your not screwing around with roll overs when switching jobs.