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Author: mjuarez Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 77135  
Subject: Re: maximum contribution/year? Date: 7/28/2003 1:07 PM
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This will be double taxed correct? Once before it goes into the account and once when it comes out.

In a sense yes. When you put that additional money in an investment account, you already paid tax on that money you earned. Assuming you get capital gains (which we all hope, of course), only those gains will be taxed. If you put $100K in that account, and 20 years later, the market crashed, and you have zero capital gains, you can take out your $100K directly, and you don't owe a cent in taxes. Of course, after 20 years, and assuming you invested it in sensible companies/index funds, it should be worth a lot more. The capital gains will, of course, be taxed.

The IRA is $3000, not $15000. Unless there is some new IRA that allows $15k/year.

I'm sorry, I was talking about the sum of both the IRA and the 401K.

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