The Pump Panel Approach to Tax Planning: Why I Don't Push All-Roth

When I was a firefighter, we didn't just study one fire suppression technique. We learned structural attack, wildland tactics, vehicle fires, hazmat response, and everything in between. Each call required different tools, different approaches. The pump panel on a fire engine has multiple discharge outlets for a reason—because no two emergencies are exactly alike.

Tax planning works the same way.

Why I Don't Push All-Roth (or All-Traditional)

Here's something that might surprise you: I don't aggressively push clients toward maximizing Roth contributions at the expense of everything else. Despite the popular advice you'll hear from influencers and well-meaning colleagues, the "max out your Roth" strategy isn't always optimal.

The reality is that we don't know what tax rates will look like in 10, 20, or 30 years. Tax laws change. Political priorities shift. What seems like an obvious choice today might not serve you well tomorrow.

The Three Tax Baskets

Instead of putting all your eggs in one basket, I recommend building wealth across three different tax treatment categories:

1. Traditional (Tax-Deferred)

• Traditional TSP, 401(k), IRA
• Tax deduction now, taxed as ordinary income in retirement
• Best when you're in a higher tax bracket today than you expect to be in retirement

2. Roth (Tax-Free)

• Roth TSP, Roth 401(k), Roth IRA
• No tax deduction now, tax-free growth and withdrawals
• Best when you're in a lower bracket now or expect significantly higher rates in the future

3. Taxable (Tax-Efficient)

• Brokerage accounts, savings, investments
• No special tax treatment, but maximum flexibility
• Long-term capital gains rates, step-up in basis at death
• Best for goals before retirement age or as a bridge

Why This Matters Now More Than Ever

The Tax Cuts and Jobs Act (TCJA) provisions are scheduled to sunset after 2025. If Congress doesn't act, tax brackets will revert to their pre-2018 levels—which means higher rates for most taxpayers.

If you've been contributing exclusively to Roth accounts during these historically low tax years, you might be missing an opportunity. These are the years when traditional contributions could provide the biggest tax savings, especially if you're in the 22% or 24% bracket.

Conversely, if rates do rise significantly and you have nothing in Roth accounts, you'll have no way to access tax-free income when you need it most.

The Pump Panel Approach

Back to my fire service analogy: a good pump operator doesn't connect every hose to the same discharge. They balance pressure across multiple lines, adjusting flow based on what the fire demands.

Your tax strategy should work the same way:

• High-income years? Lean heavier on traditional contributions to reduce your current tax burden.
• Lower-income years? Shift more toward Roth while you're in a lower bracket.
• Military deployment to a combat zone? Maximize Roth contributions while your income is tax-free anyway.
• Building an emergency fund or saving for a house? Taxable accounts give you flexibility without early withdrawal penalties.

The Bottom Line

The best tax strategy is the one that gives you options. Life changes. Tax laws change. Your income and goals will change. By building assets across all three tax baskets, you position yourself to adapt to whatever comes next.

Just like a fire officer who shows up prepared for multiple scenarios, you want to arrive at retirement with the right tools for whatever situation you find. That means Traditional AND Roth AND taxable—not putting everything in one place and hoping for the best.

If you're trying to figure out the right balance for your situation, that's exactly the kind of planning I help clients with. The answer isn't the same for everyone, and it shouldn't be.