"My parents are paying a higher tax rate now, in retirement, than they did when they were working and invested in IRA's."When your investment plan succeeds, this is often the outcome. But this is a wonderful problem to have. There are then numerous ways to consider to deal with those taxes. But at least you have the resources to play with.If you knew this problem was likely to happen, LTBH (long term buy and hold) in a taxable account is a better plan--provided you can find investments you can hold long term and you have the discipline to stay with the plan. You pay taxes only at capital gains rates when you sell (if you select the right investments) and then at low, capital gains rates.Money in IRA does give you great flexibility on when you will pay taxes. You can set it up only to pay taxes on what you spend. Then you can take larger distributions in years when your taxes are otherwise low. This helps minimize the tax burden, though it is true its difficult to completely avoid those taxes. For those mostly in index funds, taking distributions when stocks are low is another way to minimize those taxes while getting more shares out of the IRA. Similarly Roth conversions cost less when stocks are down.
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