The Case for IRAs

Studies | Retirement

No. 163
Monday, April 01, 1991
by Gary Robbins and Aldona Robbins

A new bill introduced by Lloyd Bentsen (D-TX) and William Roth (R-DE) would restore the right of every American to contribute up to $2,000 a year to an IRA account. As an alternative, the bill would give people the option to contribute up to $2,000 to a "backended IRA," where contributions are made with aftertax dollars and withdrawals are tax free. Because the marginal tax rate will be higher at the time of retirement than currently for a significant number of people, we predict that about 60 percent of new contributions would be to backended, rather than traditional, IRAs.

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