No. of Recommendations: 1
Nick you posted: If the 100K goes into a taxable account, you lose $25,000 off the top..

Like Jess, I don't see how you came up with the idea that you some how lose $25K "off the top." You start out by saying $100K goes into a taxable account...that's implies the $100K is AFTER tax money. How do you lose $25K? And did you calculate the taxable account based upon $75K earning 6% (since this is the after-tax return)?

Conclusion: A tax sheltered account is better than any taxable account.

I'm certainly not the brightest bulb on the tree, but that is a faulty conclusion. It may be true for the theoretical set of circumstances in your calculations, but Real Life [tm] can/will alter you results in several depends...

Perhaps like 401k plans requiring company stock (Enron/Worldcom), or a plan that limits your options to a GIC, or doesn't permit brokerage options, or has severe brokerage transaction fees.

Tax sheltered plans CAN certainly outperform in situations where the company "matches" or the funds you're in become the next Magellan.

ZG (who maximizes his 401k contributions every year, but wishes his brokerage option was Scottrade)
Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.