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One other thing to think about is your tax rates now vs. your tax rates in the future.

Yes, long-term capital gain rates today are lower than ordinary income rates today. But you really need to consider two components to this.

First, for the amounts contributed to the plans, the proper comparison is ordinary income rates today (the amounts contributed to the 403b and/or 457 plans are not taxed right now) compared to the ordinary income rates when you eventually withdraw the money.

Next, you compare the tax rates on the income generated by the money between now and when it's retirement time (which will be a mix of ordinary and capital gain rates, depending on how the money is invested) to ordinary rates in retirement.

Basically, there is the potential for some arbitrage in tax rates from your current rate to your retirement rate. Unfortunately, that calls for a really good crystal ball to determine the future tax rates. Or, more realistically, you project the future rates based on current tax laws and the known changes, including inflation indexing.

--Peter <== thinking the crystal ball may be the easier approach
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