Broker Check

What’s Not Discussed about Roth IRAs

The truth is that contributory tax-advantaged retirement plans were created in the late 1970’s and early 1980’s under the general premise that a) our tax system is progressive (meaning that progressively higher incomes are taxed at progressively higher rates) and b) workers generally earn higher incomes during their working years than during retirement.

These traditional programs offer savers a way to defer some income (and therefore some taxation) during their higher income working years and take it during their lower-income retirement years. That’s money-in-the-pocket regardless of investment return.

Fast forward to the late 1990’s and the introduction of the Roth IRA. This vehicle was billed as a way for savers to withdraw all investment earnings tax-free if taken during retirement. Moreover, this plan would not be subjected to mandatory distributions as are traditional plans. In exchange, for giving up a tax deduction on contributions, workers would enjoy tax benefits in retirement.

What’s not discussed about Roth IRAs, in my opinion, is that using a Roth could end up working in reverse.  Certain individuals in a higher tax bracket during their working years may be foregoing a tax deduction; only to find out the tax advantages during their retirement years are not so great.

Remember the original premise of contributory plans: reducing taxable income during the years you’d be in a higher tax bracket and taking withdrawals during the years when you’d be in a lower tax bracket. For those in that situation, a Roth is tantamount to shooting yourself in the foot.  So a Roth can be ideal for individuals who expect to be in a higher tax bracket during their retirement years.

You owe it to yourself to have this conversation with your financial planner or financial advisor. 


 Scott J. Menta, CFP, CLU, ChFC


Scott Menta has helped many people make decisions through a structured planning process that focuses on meeting long-term goals. As a CERTIFIED FINANCIAL PLANNER™ professional at Barnum Financial Group, Scott has published numerous articles offering insights and guidance to individuals looking to create and manage their wealth. He can be reached at or 1-877-GO-SCOTT.

This article was prepared by Scott Menta and is not intended as legal, tax, accounting or financial advice. Scott Menta is a registered representative of and offers securities and investment advisory services through MML Investors Services, LLC.  Member SIPC. 6 Corporate Drive, Shelton, CT 06484 The opinions provided above are not necessarily those of MML Investors Services, LLC or its affiliates.