Quote:
Originally Posted by Rain Man
So by holding it in an IRA, you end up paying a higher tax on the gains.
Now, it's still better to put it in an IRA because it's pre-tax money going in, which gives you a bigger investment, and the taxes are deferred for many years, but I'd never thought about the fact that you take a bigger bite coming out.
Am I thinking about this right? Do I have any wrong assumptions?
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I would consider the state tax implications for those of us living in states that have state income tax. A lot of states will limit or exempt retirement income entirely, and IRA distributions are included in that, whereas no such limitation/exemption exists for capital gains taxed by the state.