Question

Suppose you are concerned the US is running deficits, what might you expect: Group of answer...

Suppose you are concerned the US is running deficits, what might you expect:

Group of answer choices

tax rates are likely to be lower in the future and you should save in a traditional 401K

taxes will be higher in the future and you should save in a traditional IRA

tax rates are likely to be lower in the future and you should save in a Roth 401K

taxes will be higher in the future and you should save in a Roth IRA

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Answer #1

taxes will be higher in the future and you should save in a Roth IRA

Explanation: Since the government is running on a deficit, it will need more money in the future to pay for the deficit. So, the government is expected to increase taxes in the future. Therefore, a Roth IRA would be more appropriate for me as in a Roth IRA I will have to pay taxes on contribution but future withdrawal would be tax free. However, in traditional IRA, contribution are tax free and tax need to paid on future withdrawal.

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