Will Tax Benefits Later Cost You Now?
Russell Holcombe, an Atlanta-based financial planner, identifies four investment vehicles with long-term investment potential which may have short-term shortcomings. His "yellow lighted" investments include: Roth IRA investments (federal exemption of Roth distributions may not apply at the state level); 401[k] plans (remember that tax penalties may apply if you need this money before 60); debt (remember the interest cost and the inflexibility of debt payments) and college plans such as 529 plans (taxes are saved to be sure--but money is tied up for about 20 years AND your child will need to qualify for and choose to attend a qualifying educational institution).
Like health savings plans and other shorter-time frame choices, Holcombe's valid point is that you LOOK not only at the tax savings, but the overall consequences of the investment. Do not go blindly into any investment.