Do you know what your income tax rate will be in the future?
The answer to that question is key to your retirement planning. If you think your tax rate will be lower in the future then it makes sense to avoid paying tax now through a tax-deferred investment vehicle like a Traditional IRA.
But with a mounting national debt, many people believe personal income tax rates will eventually be forced to increase.
Even if the national debt somehow gets taken care of, the government doesn’t tend to lower a tax once it is set.
If tax rates are going to go up the best retirement account for you to open if you qualify is a Roth IRA.
You will pay income tax today and never pay income tax on your nest egg again.
Where to Open a Roth IRA
Once you’ve made the decision to open a Roth IRA there are a number of companies that are happy to accept your contributions. The number of options you have can be overwhelming: do you go with a discount broker, a full-service broker, or direct to a mutual fund company?