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URL:  http://boards.fool.com/ltltnow-the-question-i-have-is-will-this-be-11032638.aspx

Subject:  Re: 401(k) to IRA rollover question Date:  7/9/1999  11:31 PM
Author:  bacon Number:  11878 of 76398

<<Now the question I have is: Will this be better in the long run since I can make widthdrawals from the Roth tax free when I retire? Or will the lost base principle outwiegh the future tax benefits? Okay, wait, I know how to use Excel....

Okay, this is what I did:

<much snipping> >>

An excellent analysis. Yes, it does matter how you take the money. It also matters when you take it. To expand on my earlier post's remark about estate tax effects: with a traditional IRA, you MUST take the money--you can't leave it beyond your actuarial lifetime. And if you're rude enough to die before your time and have a sizable chunk of money left in that IRA, your heirs get bit big by Uncle Sugar's estate taxes. With a Roth, you don't ever have to take it out (and with your $1M outcome, you should be able to live on $50K/yr withdrawals while your Roth actually continues to grow forever--run the numbers on that one--assume you live to 90 (actuarially, you'd be dead by then, and so would have had to have taken all of your traditional IRA by then) and see what the pile works out to). Still a large chunk of estate taxes, but off a much bigger pile, and (Pixy will correct me/fill in the details), Roths get (so far) better estate treatment than traditional IRAs. Leaves more money behind for your heirs.

Enjoy your retirement....

Eric Hines
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