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TMFPixy wrote,

As Pauleckler points out, earnings may and should be transferred to the IRA. You have never paid income tax on them, so they are eligible for the transfer. The after-tax contributions are the only money that cannot be put into the IRA. And, because the tax on that sum has already been paid, you may do with it what you wish. It just cannot continue to grow in a qualified retirement plan on a tax deferred basis.

Pixy's and Paul's comments are quite true, however, I'm not sure that the fact your money "cannot continue to grow in a qualified retirement plan on a tax deferred basis" is necessarily a disadvantage. (And Pixy may not be implying it's a disadvantage.)

If you put your taxable money in a Tax-Managed Index Fund or a LTB&H stock portfolio, most of your gains will be taxed at the capital gains rate (max=20%). All of you earnings in an IRA are taxed as ordinary income (max=39.6%). It's a huge difference if you're in one of the higher tax brackets.

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