The Choices
Which answer is correct?
Compare the tax rate now with the likely tax rate later.
- A Which account has a better app
- B Whether future tax rate is higher or lower
- C Which one has a cooler name
- D Whether stocks go up this year
Answer: B · Whether future tax rate is higher or lower
The core question is whether your tax rate is higher now or likely to be higher later. Roth wins more often when future tax rates are higher.
The money lesson
The key question is tax rate timing: are you better off paying tax today or later? That depends on current and future marginal tax rates.
This puzzle is designed to make one financial rule easier to remember. Use it as a starting point, then run your own numbers before making a real-world decision.