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When the earnings are withdrawn in retirement, they are taxed as ordinary income. So to the extent the earnings in an IRA come from ordinary income items (interest and short term capital gains, for example) the deferral works fine.

so you have to keep track, yes?

earnings are taxed (at ordinary income rates) when withdrawn
non-deductible contributions are not
deductible contributions are..

and every withdrawal could be some combination of all three?
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