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... the 5% gain in the taxable account is not getting taxed every year, only when it is sold.

Good catch. I was thinking interest-bearing bank account (which currently pays under 1%, but I would hope over 20 years it could average more).
Other investments work differently.

You had $6500 to begin with.
If you have $5000 after taxes for Roth, that's not a 30% tax rate, it's ($1500/$6500) = 23.7%.

Very good catch.

I was using the tradition IRA numbers: if you have a $5000 deduction resulting in a $1500 tax savings, then the rate is 1500/5000=30%.
So if the tax rate is 30%, the Roth IRA guy has to start with $7143 (instead of $6500) if he's going to put $5000 into his Roth.

I guess it's not a wash right off the bat, but I'm glad to see Roth is still a better choice.

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