By having a combination of Roth IRAs and deferred compensation accounts, you can manage your tax situation more effectively. If you want to reduce your taxable income in a given year, you can withdraw more money from a Roth IRA and less from deferred compensation arrangements. Roth IRAs and deferred compensation plans allow you to save on taxes with your retirement money, but at different points in your career. A Roth individual retirement account has income limits, so if yours is too high, you may not be able to contribute.
With deferred compensation, you're unlikely to have a plan unless you have a high income. If you've earned a place in a higher tax bracket, deferring payment until retirement lowers your tax bill because you have less income to report. If you have to choose between investing in a Roth or deferring compensation, it may all be due to how high your taxes are now and what you expect them to be in the future.
