No. of Recommendations: 3
IMHO it is a bad idea to pay any taxes currently if they can be put off legally to the future years.

Even if, in future years, the anticipated rates paid for taxes will be higher? Because that's what the law currently says is going to occur - the currently low tax rates of 10%, 12%, 22%, 24%, 32%, 35% and 37% will return to 10%, 15%, 25%, 28%, 35% and 39.6% in 2026. Every tax bracket, except the 10% and the 35% bracket will be increased by 2% - 4%. Coupled with the change to chained CPI, which will stealthily push people into higher brackets, many people will be facing higher rates in the future, even if their income buying power remains the same.

In the first place --Any funds still in your control can continue earning additional funds on your behalf all the time until the taxes must be paid. If the deferral time frame is long enough you might end up with more money after the taxes due at the later date than you have now.

Sure, it's possible. But you also have to consider the additional taxes you will pay on that growth. And when the future tax rates will be higher, you start out with at least 2 strikes against you on that bet.

Secondly--you might not be here when the taxes become due so it would not be your problem. It would be your heirs problem----But since you earned the money and they didn't, they shouldn't complain too much about paying taxes on the free money they are getting.

Or the heirs, in the case of converting to Roth, could get more money because they won't owe any taxes at all. And the chances of dying before using the money for oneself probably enhances the chances that the heirs will be in a higher tax bracket, since they are more likely to be in their high earning years. That would probably result in overall higher taxes being paid.

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