Mama Bear, yes that's so, and IMO important if the choice were to put money in a tax-deferred account or to put it in an after tax account. But in this case, money will be put into both accounts-- so it's a question of what will be bought.
I'm saying - for example - if $2k pretax were put into a tax-deferred account and a consistent 10% REIT bought with a component that was a consistent 50% ret. of capital, that when money is withdrawn from a tax-deferred account, each and all of the annual $200 dividend is going to be taxed as ordinary income (and the original $2k also as it comes out). I'd put $2k in a tax-deferred account certainly, but I'd rather have that $200 of REIT income in a taxable $2k account, pay tax on $100 of div. each year, and have the other $100 as ret. of capital. (and with the consequence that the ret.of capital reduces the cost basis of the REIT, which affects the capital gain or loss I get when I sell the REIT.)
That, as I say, is what I do with REITs. What is best for me, or what others should do with their own funds, I do not know. Paul Senior |
