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Greetings, GADawg, and welcome.

You asked:

<<My question is this:
I believe my tax rate will be well above 28% when I am eligible to withdraw funds penalty free from my IRA in 35 years. The tax rate may be as high as 60% or more.

That makes me lean toward converting to a Roth, paying my 28% and not worrying about the tax rate at the later point. However, given the government's tendency to change the law on retirement accounts, I don't want to pay tax now and pay tax later when the government decides in 20 years it needs new income and there are a lot of IRAs with a lot of $'s in them.

Simply put, is a bird in the hand (money I haven't paid tax on) worth two in the bush (pay that tax and hope I won't have to pay tax again later)?

I don't want to sound like an avid X-Files fan, but my father took a big hit when he withdrew funds from his 401k to put me through college. When he contributed to the 401k the law stated that money used to pay for education would not be penalized.>>

And DrBear answered:

<<You're right. Any change in the tax laws today could conceivably go away by the time you're ready to take advantage of it in 35 years.

That said, what if it doesn't change (or as TMFPixy intimiated in an earlier posting, it changes but all existing Roth IRAs are grandfathered)? In 35 years, you're $2500 @ 10% would grow to $70,000. If you don't convert, you're assured of paying tax on it (hopefully not at the egregious 60% rate you stated); convert and it's all yours. Assuming you can pay the tax from outside the IRA, I think the reward outweighs the risk, but it's a choice everyone needs to make for themselves.>>

Then Oneplez added:

<<I'm a bit older than the questioner, but I have the same anxiety!

I can remember when the 1st republican apostle, Ron, started taxing 50% of Social Security and taking away many of our tax deductions and limiting the others so any deductibility is minimal. Then Bill followed up by raising Social Security taxes to 85%>>

So Pixy sez:

We could debate this ad infinitum. The Congress giveth and the Congress taketh away. Our illustrious leaders could change the rules anytime they wish. I'm just a wet-behind-the-years youngster of 29 (I'll celebrate the 30th anniversary of that birthday in a couple of months), so I don't really have a lot to go on. But my years of observation of the Hill lead me to believe -- quite strongly -- that Congress will in five years or so withdraw the Roth as such. They also will grandfather those who already have them. Those who don't take advantage while they're available will lose out. Those who do will gain.

BUT -- That's not a guarantee. Just the observations of a long-time observer and tracker of the machinations of Capitol Hill.

Pixy's Motto: Ya makes your choices, and ya lives with the results.

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