Page 91 - The Informed Fed--Hearn (edited 10.29.20)

The perceived tax benefit may never be realized. In other words, one
might not live to retirement or much beyond; in which case, the tax
structure of a Roth only serves to reduce an estate that may not have
been subject to tax. One must live until one’s Roth IRA contributions
have been withdrawn and exhausted to fully realize the tax benefit.
Whereas, with a traditional IRA, tax might never be collected at all. In
other words, if one dies prior to retirement with an estate below the tax
threshold, or goes into retirement with income below the tax threshold
(the beneficiary must be named in the appropriate IRA beneficiary form);
a beneficiary inheriting the IRA solely through a will, would not be
eligible for the estate tax exemption. Additionally, the beneficiary will be
subject to income tax unless the inheritance is a Roth IRA. Heirs will
have to pay taxes on withdrawals from traditional IRA assets they inherit
and must continue to take mandatory distributions (although it will be
based on their life expectancy). It is also possible that tax laws may
change by the time one reaches retirement age.
Congress may change the rules that currently allow for tax free
withdrawal of Roth IRA contributions. Therefore, someone who
contributes to a traditional IRA is guaranteed to realize an immediate tax
benefit, whereas someone who contributes to a Roth IRA must wait for
a number of years before realizing the tax benefit. That person assumes
the risk that the rules might be changed during the interim. On the other
hand, taxing earnings on an account which were promised to be untaxed
may be seen as a violation of contract. Individuals contributing to a Roth
IRA now may in fact be saving themselves from new, possibly higher
income tax obligations in the future. However, the federal government
is not restricted by the Contract Clause of the U.S. Constitution that
prohibits “Law[s] impairing the Obligation of Contracts”. By its terms,
this prohibition applies only to state governments.

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