As to whether to pay tax now or later, there is a possibility you could be in a higher tax bracket in retirementThis is why we took a lump sum distribution of my husband's 401K instead of rolling it into an IRA. We will be paying 23% federal tax on it, but knew we'd never be in that low a bracket in 6 years when he had to start taking it out even though we probably will never need it.It also made our estate planning much easier. That 23% will never be in his estate and our kids won't have to deal with inheriting an IRA. We also plan on gifting to lower the possibility of estate taxes.The key to doing this successfully is to then invest the money in a tax managed fund (often similar to an index fund) or do a lot of research and buy only stocks that you will hold forever.Carol
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