NOTES AND COMMUNICATIONS: The Financial Feasibility of Tax-Sheltered Individual Retirement Plans: Comment

Gahin [2] offers an analysis of tax-sheltered individual retirement plans (section 403(b), IRAs, Keoghs, etc.) which focuses on the net cash flow (i.e., net present value, discounting for mortality and investment earnings). He concludes that tax sheltered annuities (TSAs) are not an attractive savings mechanism for a younger individual whose tax rate will be higher following retirement. These results conflict with those of Adelman and Dorfman [1], who also examined tax-deferred annuities where the tax rate during the withdrawal years exceeded the tax rate during contribution years.