In the spirit of this question, now 4 years later, I'd like to know if there are any concerns with the future "security" of Roth accounts.

I'm currently maxing out mine and my spouse's Roth and contributing 14% to employer Roth 401(k). Given the recent (rejected) proposals by the president for RMDs and spousal disbursements, it made me wonder - what changes to the tax codes affecting Roths would make you reconsider future contributions over the next ~20 years?

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    I think the question could be reworded to ask about what factors could change in the future that would favor one or the other. Instead of speculating about what will change in the future, we can discuss ways of mitigating those risks. That would also eliminate the need for someone else to re-ask this question four more years from now. – NL - Apologize to Monica Jul 9 '15 at 21:16

It is impossible to know what future taxes will look like, so there is something to be said for using both (i.e. that you increase your flexibility to draw from one or the other depending on your tax situation and financial needs in retirement). When you find yourself in higher tax brackets, you should probably take the deduction now, and when you find yourself in lower brackets, skip the deduction in favor of future benefits.

There are a few tax choices that would be particularly detrimental to Roth accounts, one would be to put a size limit or an outright repeal of the tax benefits. Another would be to completely replace income taxes with consumption taxes effectively doing the same thing as an outright repeal. Any of these choices are politically risky, so barring a major fiscal melt-down, I would place my bets on minor tinkering around the status quo.

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  • Agreed. Those are primary among the internet rumor mills I've read about potential changes. I'm planning on trudging along as usual and hopefully, we'll never go down that path. – InbetweenWeekends Jul 10 '15 at 3:03
  • To be fair, while it's hard to say what future taxes will look like, it's easy to say what past taxes looked like, and we're in a relatively low period of income taxing. Not to mention that dealing with the taxes you know is safer than dealing with the taxes you don't. – David Rice Jul 10 '15 at 21:23

Chances are that your question will be closed as "speculative."

I think the best you can do is to plan as though the rules will remain as is, but brace yourself for any change. For example, if the Roth accounts had RMDs, would your plan change? Hopefully not, the RMD is typically less that what you'd be spending anyway, but even in later years, just continue to keep the extra funds invested. Will Roth withdrawals trigger tax on Social Security benefits? Probably. Because right now, Roth's greatest loophole is that non-triggering feature. Will congress vote to outright tax the Roth? Not if they wish to keep their jobs.

I'm a bit concerned by your over weighting toward the Roth flavor. Depending on your age and bracket, some money should probably be invested pre tax. But without more details it's tough to say.

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