When Vanguard recently asked readers of its blog about their retirement planning regrets, the company received an overwhelming response. At last count, there were 569 responses.

One common regret came from people who had used a traditional IRA or 401(k) instead of a Roth. In retirement, such folks are feeling the pain of having to pay ordinary income tax on their withdrawals.

Among the comments:

“In addition to being diversified in asset classes, I should have also been diversified in tax types. Most of my funds are in a traditional 401k (soon to be a rollover IRA) so now everything I withdraw is taxable…. Getting the initial tax benefit of traditional IRA and 401k is great to get started investing but that accumulated wealth will be taxable when you need it and the conventional wisdom of taxes being lower during retirement may not be totally true.”

“I was slow to appreciate the advantage of Roth IRAs. Regular IRAs invested in stock mutual funds convert qualified dividends and capital gains into ordinary fully taxable income. Not good.”

“The mistake I made was not converting my IRA to a Roth IRA in the 1990s. I thought the taxes for the conversion were too high. The result is that we are paying a higher tax rate now because the RMD [required minimum distribution] has raised our tax bracket and has increased our Medicare premium considerately each month. It has been an expensive lesson.”

Such comments could be helpful to someone who hasn’t given serious consideration to using a Roth IRA or 401(k), but they could also be dangerous if they sway people too quickly away from a traditional IRA or 401(k).

What’s missing from the Vanguard blog comments is the perspective Mark brought to the topic with his 2015 article, Overlooked Factors in the Roth vs. Traditional Decision. As he pointed out,

There are a lot of retirees who are paying higher tax rates on their Roth contributions and conversions while they are working than their average tax rate would be if they were withdrawing from a Traditional IRA in retirement and “filling in” those lower tax brackets with IRA income.

Typical explanations of the tax implications of using a Traditional vs. a Roth IRA usually paint the story in black and white. With a Roth, you pay the taxes now and then take tax-free withdrawals in retirement, whereas with a traditional, you get a tax deduction for contributions now but pay ordinary income taxes on withdrawals in retirement.

While that explanation is accurate, it misses the fact that our tax system is progressive, meaning portions of income are taxed at different rates. What Mark was highlighting when he wrote about “filling in those lower tax brackets” is that an initial portion of your income isn’t taxable due to deductions and exemptions. On your remaining taxable income, the first $19,050 is taxed at 10% (according to projected 2018 tax brackets), and the next $58,350 is taxed at 15%. Only any income above $77,400 is taxed at 25% or more.

So, when you hear that withdrawals from a traditional IRA in retirement are taxable as ordinary income, that doesn’t necessarily mean the money will be taxed at your highest marginal tax rate. It depends on the amount of your retirement income.

Here’s Mark again:

…this “filling in the lower tax brackets with IRA income” issue makes me think that many older workers might be better off using Traditional IRAs and 401k plans than Roths. And it's less obvious that Roth conversions for older workers are a great idea.

There are a lot of moving parts here — enough to give even the most analytical among us a headache. And unfortunately, most of the Roth-vs.-Traditional calculators I’ve seen are woefully limited in the number of variables they allow.

So, I’ll leave you with two ideas to consider:

First, to those who are all-in on the Roth, especially older, higher-income people, you may be over-emphasizing future tax benefits at the risk of over-paying on taxes now.

Second, given the complexity of the decision and the inability to accurately anticipate everything from future tax rates to how much retirement income you will have, perhaps the best overarching approach is the one SMI has suggested many times: Diversify your tax strategy, investing a portion of your retirement contributions in a traditional IRA or 401(k) and a portion in a Roth.

Another article that’s well worth reading is Traditional IRA vs. Roth: Which Maximizes Retirement Income?

How have you waded through this decision and what conclusion did you come to?