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To: Libloather
One of my biggest concerns is since there are trillions of dollars sitting in 401 K just waiting for Congress to get their greedy filthy hands on the tax revenue generated when people start retiring...

With the country trillions in debt looming...

Who says Congress won't amend the rules to say they will tax your capital gains at a mere 75 % (like the french) when you pull your money out...instead of the 36 to 42 % now...

I moved 50 % of my retirement 401 K contribution to a Roth 401 K where you are taxed when you contribute verses taxes after years of capital gains...

My returns may be smaller but my tax liability is much less

9 posted on 02/08/2014 5:03:52 AM PST by Popman ("Resistance to Tyrants is Obedience to God" - Thomas Jefferson)
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To: Popman
I moved 50 % of my retirement 401 K contribution to a Roth 401 K where you are taxed when you contribute verses taxes after years of capital gains.

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.

21 posted on 02/08/2014 7:02:54 AM PST by Alberta's Child ("I've never seen such a conclave of minstrels in my life.")
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