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Yes, I did overlook the consequences of having to gradually pull $66,000 out of my money market accounts. So I re-calculated based on what the $66,000 in money market would've appreciated to over a 25 year period.

Perhaps this is less fair than just reducing the intial sum to $134,000 to pay the taxes, but here is what my calculations are based on paying the IRS with existing Taxable Money Market funds:

In the example I used in which I invested in Index Funds within a Taxable Account, I would be paying $66,000 in taxes over a 25 year period, so this money would have to get taken out of my Taxable Money Market accounts gradually, (in order to pay the taxes while letting me contribute the same amount to my Taxable Index Funds, as I would've contributed to a Keogh).

I should have calculated how much this 66,000 ($2640 yearly payments to the IRS) taken out of Taxable Money Market funds would've appreciated, if I had just left it in Taxable Money Market instead of giving the IRS the money.

On a spreadsheet I calculated that if this Taxable Money Market ($66,000 in 25 yearly payments of $2640)grew at an average of 3% per year, after taxes, it would've apprecated to $99,140 over a 25 year period, so I'd be giving the IRS an extra $33,140 of my money.

This $33,140, if added to my original $146,000 calculation for taxes paid without the Keogh, would equal $179,140. This is still less than the $198,000 in taxes when using the Keogh. Who knows?...Maybe the Keogh would prove better if I factored in Tax-Deferred appreciation during the years I would be withdrawing the money from the Keogh.

And I guess that maybe it would be more fair to just use the $134,000 figure as the amount invested without the Keogh, rather than paying the IRS from existing Taxable Money Market accounts.

Anyway, the Keogh is probably better but probably not by a wide margin.

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