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Subject:  Hedging Bets Away From Roth Investing Date:  1/5/2008  10:50 AM
Author:  TheXRayStyle Number:  97639 of 127638

Greetings all,

With the recent news of Mike Huckabee winning the Iowa Republican Primary, it may behoove us to consider contributing to a Traditional IRA rather than a Roth IRA in the future. The reason I say this is that Huckabee expressly supports the "FairTax" plan ( which would basically eliminate income/payroll taxes and institute a universal 23% sales tax. Such a consumption tax would be very bad for those like me who have their tax-advantaged retirement savings strictly in a Roth, as income taxes were already paid and we would still be paying the consumption tax after we withdraw money from our roth. Those with pre-tax money in a Traditional IRA would never have to pay income taxes on that money, and would be left with much more spending power.

I'm getting increasingly worried about keeping money in a Roth, as I'm only 23 and there is lots of time for something such as this plan to kill any tax advantage I might gain from investing in a Roth. The reason I like the Roth is that I expect to be in a higher tax bracket after I retire than I currently am in as a grad student. Is anybody else considering splitting contributions in the future between a Traditional IRA and Roth IRA for this, or a similar, reason?



(Cross-posted to Retirement Investing Board)
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