feeling like a roth is a waste now

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badatmath

Thinks s/he gets paid by the post
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since the passage of the secure act I am feeling a little like the roth will change down the road too and why bother. . .

Is it hard for the rest of you to stick to the original game plan?
 
brewer12345 said:
I've never had access to an employer-sponsored HSA. Can you explain why they would be so attractive?
Click to expand...
They have great tax benefits. The article below outlines the very commonly mentioned triple tax advantages. If it comes out of your paycheck then it is before they calc Fed Taxes. Point 1 below.

Aside: an example, my wife is retiring this April so we stopped her 401K and bumped up her HSA contributions to hit the max at the end of April (lowering her paycheck taxable amount); COBRA remaining of year so still on High Deduct plan all 12 months.

Beside the below this google search gets you to some key sites: https://www.google.com/search?q=hsa+benefits+triple

Via:
https://www.investors.com/etfs-and-funds/personal-finance/what-is-an-hsa-health-savings-account/

HSA Benefits: The HSA Triple Tax Advantage
One of the first things to understand about what is an HSA is that they provide a triple tax advantage:

  1. Contributions are tax-deductible, so they reduce your federal income taxes owed.
  2. Assets in your HSA account typically grow tax-free, at least at the federal level.
  3. Funds can be withdrawn without being taxed by Uncle Sam if you use them for qualified medical expenses.
 
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badatmath said:
since the passage of the secure act I am feeling a little like the roth will change down the road too and why bother. . .

Is it hard for the rest of you to stick to the original game plan?
Click to expand...

Agree with you. Not fair, changing the "rules" of the game, after the game has started. To be fair, they should have "grandfather'd" in us "older" participants.

OH, I assume you are referring to, the "end" of the stretch inherited IRA.
(OK, I know, it's now 10 years).:mad:

OP, there still is hope, so wait a while. While listening to a talk show, the
host did mention, there are a lot of "unhappy" folks out there. So, they might repeal that portion of the Changes.

I figure, most people were not aware of the 10 yr rule. In fact, I bet, most
people did not even know the IRA rules where changing. :LOL:
 
A Roth is worth it. It grows tax free.
Should Congress start working on a law to tax it, I'll withdraw it all taxfree.
They will have to backdate the law to catch me, and they will catch themselves too if they do that.
 
Today I am thinking that Congress will hold off on getting at the Roth accounts until they come up with what they think is a good reason...it could be a long ways off or not.

Still, Roth is one of the maybe-temporary ways investors have to gain some kind of advantage today. Get what is in front of you now, and use it wisely.
 
Changes in Roth taxation are way down on the list of concerns i have.
 
target2019 said:
Today I am thinking that Congress will hold off on getting at the Roth accounts until they come up with what they think is a good reason...it could be a long ways off or not.

Still, Roth is one of the maybe-temporary ways investors have to gain some kind of advantage today. Get what is in front of you now, and use it wisely.
Click to expand...

Exactly.
 
Hmm, change in taxation of the roth is not my only concern, I do not want another RMD at the time I am taking my 401k RMDs.

I don't have access to HSA.

I think the change in the stretch will force more people to some sort alternate plan which may draw more attention to the Roth and they will be like Oooh money we can tax!!

I am still going to send the check, I just don't feel good about it. And normally I feel like I am doing the right thing.
 
Sunset said:
A Roth is worth it. It grows tax free.
Should Congress start working on a law to tax it, I'll withdraw it all taxfree.
They will have to backdate the law to catch me, and they will catch themselves too if they do that.
Click to expand...

+1
 
Unless they change the law retraoctively, you would have time to make a move to withdraw the funds in your Roth. At this point, I don't even hear any chatter about a change, so unless you do, I wouldn't worry. When you hear some chatter, withdraw half and roll.
 
Who knows, but I'll say that things would have to have gotten pretty bad in other areas of taxation for them to go after additional tax revenue from Roth (just my feeling on this)...
 
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foxfirev5 said:
Changes in Roth taxation are way down on the list of concerns i have.
Click to expand...

pb4uski said:
+1
Click to expand...

+2

I also think changes to ROTH rules are pretty far down on Congresses list too. When you think about it, you’re only going tax free on the growth and I haven’t looked it up, but I doubt there’s a very large percentage of people who actually have ROTHs. I just doubt the trouble is worth it for the tax revenue they’d receive. They’d probably just end them if they got on their radar.

Eliminating the stretch doesn’t bother me so much. Yes, it’s a change to the nature of the benefit, but it’s really an impact on inheritance. That doesn’t mean it still isn’t a good tool for current planning and tax minimization.
 
Jerry1 said:
+2

I also think changes to ROTH rules are pretty far down on Congresses list too. When you think about it, you’re only going tax free on the growth and I haven’t looked it up, but I doubt there’s a very large percentage of people who actually have ROTHs. I just doubt the trouble is worth it for the tax revenue they’d receive. They’d probably just end them if they got on their radar.
Click to expand...

I agree that Roth's are at a very low risk. Remember you've already paid taxes on the entire basis, and double taxation (at least when it's that blatant) is something the tax code explicitly avoids. If you're that concerned, keep records of your basis so you'll know how much of the account is growth.

If they do decide there's too much tax deferred money out there and they want to go after Roth's, I think they're more likely to repeal the law and prevent new accounts from being established and maybe prevent contributions and conversions into old accounts. That would be a lot easier than taxing something people were never told they needed to track a basis for.
 
Jerry1 said:
but I doubt there’s a very large percentage of people who actually have ROTHs. I just doubt the trouble is worth it for the tax revenue they’d receive. They’d probably just end them if they got on their radar.
Click to expand...

It also means the political consequences of undoing the Roth benefits will be small.
 
I would look at the alternatives this way. Assume I have $14,000 income to put in some sort of investment account.

1. I put the money in a regular after tax account. I will already have paid the taxes on the $14,000 and will pay taxes on any gains going forward.

2. I put the money in a Roth account. I will already have paid the taxes on the $14,000 and one of the following two things will happen:

a. Current law continues and I will not pay any taxes on the gains; or b. The law changes and I must pay taxes on the gains.

So, what is the downside of contributing to a Roth? Under current law, it is better than a regular after tax account, and if the law changes to tax Roth gains, it won't be any worse than a regular after tax account.
 
My only concern would be if I intended to leave a ROTH IRA to a non-spouse. Congress could change the law so that the gains are taxable. Other than that, I don't see any real likely risk.
 
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