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Two things need to be remembered. We are just talking here about the 15% tax bracket. If you have invested in other ways, you will be at the 28% tax bracket quickly.

Assume a 10.5% ROR, $2000 dollar investment in each type of IRA, taxes paid yearly on the Roth IRA ($560 @ 28% bracket). Invest for 25 years and remove proceeds for 25 years. Tax brackets and percentages are the same as the current numbers.

To equate the two $2000 investments, you would need to add a $560 investment of taxable funds to the regular IRA. This equates to your tax burden of the other IRA. Invest this money according to today's tax laws- assume only long term capital gains and no dividends. Lets not make this too complicated. You are taxed at 20%.

In 25 years, your Roth IRA has $361,xxx and the regular IRA has $361,xxx and the extra taxable account has $101,3xx.

If you distribute the moneys as only income, your Roth IRA yields $40K and your combined gross regular income is $51K. After taxes, this $51K becomes $43K. You win the derby with the regular IRA by $3K per year.

If you have other incomes- 401(k), investments, etc... You would consider your moneys at the 28% tax bracket. That is because you are already getting your other monies that are not variables.

Your Roth IRA stays at $40,000 per year, and your before tax regular income is $51K. However, your after tax income becomes $38K. Now the Roth wins.

Personally, I'm in the second category and intend to use Roth to the hilt.

The tax difference expands when you hit the 33% tax bracket. Also, if you participate in an employee sponsored retirement plan, you can't even get tax benefits from the regular IRA at this time.
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