I think I may have a clue in the author Ric Edelman's reasoning which I found in this
Q and A.
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Buffalo, N.Y.: I did not understand Mr. Edelman's answer regarding 401s transferring over to Roths. If you are at a 25% bracket, and have a large 401 k, it is almost certain that you will be in higher tax bracket when you retire and start to withdraw 401 money (even if the rates stay where they are and they may rise). So, doesn't it make sense to pay less tax now rather than much more later?
Thanks for a further explanation.
Ric Edelman: It is almost certain? Really? Wow! I've never before met anyone who was able to predict what tax rates would be 20 years into the future!
20 years ago, the top tax rate was about 70%. Today, it's half that. What makes you so sure that future rates will be higher? What makes you so sure we'll even HAVE an income tax? There's lots of talk about flat taxes, value-added taxes, sales taxes and such - all of which would eliminate our income tax and thus render *all* IRA's - both traditional AND roth's tax-free.
So, sure, it makes sense to pay a lower tax today than a higher tax tomorrow...it's just that I have no confidence that tomorrow's tax will truly be higher! [img]/images/graemlins/smile.gif[/img]
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