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I'm not sure how much this has been discussed here before.... I could post some examples with numbers for the after tax $$ if it would be helpful.

Please do! The more LSA's and RSA's are discussed, the more people will know of them.

With the latest proposed contribution limits, between RSAs and LSAs many middle class people will be able to put most (or all) of their retirement savings in these types of accounts. Unfortunately, some will probably be so successful in this, that their taxable income during retirement will be negligible. These people would have more after tax money available in retirement, if they had put more in tax deferred IRAs rather than the tax exempt ones (assuming they qualify).

Yes, one needs to find the balance point to maximize tax savings, taking into account partially taxable social security and wholly taxable pensions and other monies, and how much you plan to live on and how much, in the case of IRA's and 401K's, you must withdraw in a tax year.

- Weitzhuis
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