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No. of Recommendations: 4
Suze's pretty good, but often she doesn't qualify things enough.

While all those points are definite reasons to make sure you're maxing out a Roth, there are plenty of other factors that would still make traditional IRAs/401Ks plenty of a benefit.

1) Tax free growth is a major boon over a decently long period of time. It has a distinct chance of overcoming other disadvantages.

2) Marginal vs. average tax rate. If you're in the 28% tax bracket now, then all the money you put into your pre-tax retirement account enjoys 28% tax savings (plus perhaps state, see point #3). When you withdraw, assuming tax rates stay the same, the first $15 to $20K will be untaxed for a married couple - due to the standard deduction and personal exemptions. The next several K will be taxed at 10%, 15%, and a larger portion still at only 25%. So while you're saving 28% in taxes now on your *marginal rate*, when you withdraw, you'll be worrying about your average tax rate, which will be significantly less.

Even with a large tax increase, you could easily still end up tax less on average on withdrawls than you would have been on contributions.

3) State taxes. Live in a state with a moderately high income tax? Perhaps are considering retiring to a low or no income tax state? Check the state rules, but perhaps you could avoid paying state tax altogether due to that move, or at least lower them.

1 + 2 + 3 = distinct possibilities, heck, likelyhood, or savings, even if tax rates jump a good amount.

Plus there are the plan-related advantages that jbking mentions.

I would encourage you to run some numbers and see how they work out, but I would not want you to say, "hmmm, taxes are low, that means a 401k is a bad deal." There's a lot more benefits than meets-the-eye at first.
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