Most of the time, tax-sheltered investments make great sense. The federal and state governments have designed their tax laws to encourage such savings. However, that said, there are three situations where it may be a poor idea to use tax-sheltered investments:

You know you’ll need the money early

In this case, it may not be a good idea to lock away money you may need before retirement because there is usually a 10 percent early withdrawal penalty paid on money retrieved from a retirement account before age 59 1/2. But you will also need money after you retire, so the “What if I need the money?” argument is more than a little weak. Yes, you may need the money before you retire, but you will absolutely need money after you retire.

You don’t need to save any more for retirement

Using retirement planning vehicles, such as IRAs, may be a reasonable way to accumulate wealth, and the deferred taxes on your investment income can make your savings grow much more quickly. Nevertheless, if you’ve already saved enough money for retirement, it’s possible that you should consider other investment options as well as estate planning issues. This special case is beyond the scope of this article, but if it applies to you, I urge you to consult a good personal financial planner preferably one who charges you an hourly fee, not one who earns a commission by selling you financial products you may not need.

Your tax rate will rise in retirement

The calculations get tricky, but if you’re only a few years away from retirement and you believe income tax rates will be going up (perhaps to deal with the huge federal budget deficit or because you’ll be paying a new state income tax), it may not make sense for you to save, say, 15 percent now but pay 45 percent later.

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