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Thanks for the clarifications in my post.

I would like to point out that while you are absolutely correct that it's very important to take into account that capital gains taxes are only on the gains, if you're investing over the long term, it is likely that a majority of your investment will be composed of gains. I agree that detailed calculations specific to an individual's circumstances would have to be made to determine what kind of investment would be best.

Also, while it is important and necessary to know about the possibility of taking qualified distributions from a 401k when you turn 55, I was making the assumption that retirement would take place before that time (although JMG did say that retirement might be as late as age 55).

Another possible thing to consider that I don't think either of us has mentioned is that if you invest in a Roth, the contributions can be withdrawn without taxes or penalties at any time... Therefore, it may be possible to completely or substantially fund a few years of retirement with only the contributions to a Roth. Assuming 25 years of contributions, that would be $50,000, which might get you by for a year. But if the contribution limit is changed, which seems likely to happen, then your contributions could be almost 5 times that amount, and may be able to last more like 5 years.
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