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"You'll be paying full income tax rates on any dividends you are accumulationg along the way in your 401K or IRA when you go to take them out, and also full boat tax on any cap gains."

I'm well aware that I will pay normal income tax rates on my IRA and 401(k) withdrawals. I don't mind one bit.

Consider this: My 401(k) and IRA's represent deferred income from the outset (I got a big tax break when I initially invested). All normally taxable events since initiation (capital gains and dividends) remained tax free over the life of these accounts (there have been, literally, hundreds of taxable events that have never been, and never will be, taxed). I know for a fact that I would not have even a fraction of what I have today had I had to pay taxes on all of my trades and dividends over the last 30 years. These tax-sheltered options, promulgated to benefit the average working stiff, have been the greatest gifts imagineable (brought to us by Democratic-majority Congresses).

(Note to Self: Skip telegraph's investment advice)

Since I believe that knowledge is power, I offer you this:

The first data to document the effect of President Bush's tax cuts for investment income show that they have significantly lowered the tax burden on the richest Americans, reducing taxes on incomes of more than $10 million by an average of about $500,000.

Those making less than $50,000 saved an average of $10 more because of the investment tax cuts, for a total of $435 in total income tax cuts, according to the computer model.

But I.R.S. data show that among the 90 percent of all taxpayers who made less than $100,000, dividend tax reductions benefited just one in seven and capital gains reductions one in 20.
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