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Subject:  Re: Uncharted waters Date:  6/14/2012  10:11 AM
Author:  TMFPMarti Number:  116269 of 121113

I guess (and this may be for another board) that the Roth IRA might be more beneficial than a traditional here?

My thinking is that she is most likely (*hopefully*) in the lowest tax bracket she will ever be in--therefore the the growth/earnings would be tax free in 64.5 years--then again, who knows what the tax landscape would be then--whether Roth IRAs will continue to exist at all


First, a note about attitude adustment. My dream, which I hope is shared by all, is to be in the highest tax bracket, not the lowest. People get so fixated on reducing taxes that they lose sight of the fact that the higher your income, the more $$ you have after taxes regardless of your bracket.

Now, back to reality. It's most likely that, at least in the beginning, DD's earnings will be less than the standard deduction. OTOH, she may be the new Gerber baby. And depending on her adorable factor, once she starts talking, watch out. I once spent a flight from Seattle to LA chatting with the father of an 8 year old who was just starting filming his second TV series. The kid was earning much more than his parents combined.

All this is leading to a Roth is probably the better IRA bet because it's likely she'll be paying little, if any, income tax. And remember that while you must make an IRA contribution for the prior tax year by April 15, you have until October 15 to change your mind about Roth vs traditional.

I don't know any better than you the future of Roth accounts, but I'm extremely doubtful that changes to existing accounts would be made retroactively.

Phil
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