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When money comes out of a Trad IRA, it's taxed at ordinary income rates, even if the major part of a withdrawal might have been from long-term cap gains. The same withdrawal from a taxable account would be taxed, substantially, at long-term cap gain rates. But the same withdrawal from a Roth would be untaxed. Thus, it seems to me that even investments that throw off mostly long-term cap gains are better off made in a Roth than in either of the other two types of accounts.

Not necessarily. You have to look beyond "will this be taxed when withdrawn?" in deciding where to keep what investments.

After-tax yield in retirement is identical when deductible contributions are compared to Roth contributions assuming the same marginal rate in retirement and investment of the current tax savings. I'm a great fan of Roth contributions when the current tax rate is low, but deductible contributions get a lot more attractive as your current tax rate rises.

Rule Your Retirement Home Fool
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