I don’t see the advantage of ROTH. You’re foregoing money in your account that would otherwise grow over the years.
Plus, in retirement, you will be in a much lower income bracket with a very real possibility of not paying income tax on your draw-down at all. I just don’t get it.
Remember, the advantage is relative to Congress up and deciding to take the money.
With a traditional IRA they can decide it was improper in the first place to have not taxed the principal,which the greedy bastards will be able to fix ... with penalties and interest on the principal not taxed and the interest earned too, presumably..
But with a Roth they’re left with trying to collect penalties and interest on the interest earned.
That was the expectation when 401(k)s and IRAs were set up. However, many people (like me) will retire with enough savings to maintain the current working lifestyle.
For people like me, I will remain in the same tax bracket that I've always been in.
Roth IRAs are a bet against future tax increases. When converting pre-tax savings to Roth IRAs, one pays ordinary income tax on the amount converted at current rates, and then the appreciation is tax free when withdrawn.
Also, paying the taxes today to convert to Roth IRAs will reduce the amount of pre-tax savings that will be subject required minimum distributions (RMDs) at age 70 1/2.
Right now, the Trump tax cuts are schedule to expire in 2025. Taxes are "cheap" right now. Converting to Roth IRAs at today's rate assumes that the rates will be higher when the funds would otherwise be withdrawn from traditional IRAs. In fact, the current tax rates may be lower than the rates were when the money was saved.
-PJ