Is a Roth IRA better if taxes are higher in the future?

Title

Is a Roth IRA better if taxes are higher in the future?

Authors

Presenter(s)

Shaun D. Huguley

Comments

Presentation: 10:45 a.m.-12:00 p.m., Kennedy Union Ballroom

Files

Description

Roth individual retirement accounts (IRAs) are funded with post tax dollars and Traditional IRAs are funded with pre-tax dollars. Traditional IRAs are taxed when the money is withdrawn.​ It has been said that if taxes are higher in the future, then it is better to use Roth IRAs, but such analysis does not take into consideration that if income is lower than certain thresholds, a taxpayer can receive credits. We use simulations to see if a Roth IRA is always better when taxes are higher in the future.

Publication Date

4-20-2022

Project Designation

Capstone Project

Primary Advisor

Alan A. Veliz-Cuba

Primary Advisor's Department

Mathematics

Keywords

Stander Symposium project, College of Arts and Sciences

United Nations Sustainable Development Goals

Decent Work and Economic Growth; Reduced Inequalities

Is a Roth IRA better if taxes are higher in the future?

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