A saver who expects to have a higher tax rate after retirement would prefer a ______.

Question

Quizplus · Accepted Answer

A saver who expects to have a higher tax rate after retirement would prefer a Roth IRA because its contributions are made after taxes, and withdrawals are tax-free. This means that even if the saver's tax rate rises after retirement, their Roth IRA distributions will not be subject to taxes, potentially saving them significant money in the long run. Traditional IRAs and retirement plans like 401k and 403b plans do not offer tax-free withdrawals, so they may not be the best choice for someone expecting to pay higher taxes in retirement.

A Saver Who Expects to Have a Higher Tax Rate