I am not a financial planner and have nothing to sell. I have lent my available funds to Warren Buffett and am not in a position to help Jim, or any of you with your retirement plan contributions.
Having said that, you owe it to yourselves to determine whether is is best to contribute to traditional plans which allow you to shelter income and thereby pay less tax now, or to contribute to a Roth with after tax $$.
You should be aware that you will see a great deal about Roth conversions of traditional plans, which will be pushed by financial advisers, insurance agents, banks, brokers, etc., who will only benefit if you buy some product from them when you convert.
There is no guarantee that say, 20 years from now, Congress will not change the rules for Roth IRAs making them taxable in order to pay for some other wonderful benefit program, so I am no a fan of paying taxes now to maybe save taxes later. From what I have read, the Roth conversion numbers only work if you have outside funds to pay the taxes incurred, and can thereby keep the traditional IRA assets intact in the Roth.
I suggest that you owe it to yourselves to pay less tax and to put something in a plan now. How much depends on how much you have left in your bank account which you can afford to contribute. You can run the numbers and see how much you can save by creating a 401k or SEP IRA. It is certain that you do not get a superbox in heaven by paying more taxes than you have to pay. Do a little research while you are waiting for the phone to ring. |
