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Politics : President Barack Obama -- Ignore unavailable to you. Want to Upgrade?

To: manalagi who wrote (19805)	5/1/2008 10:55:22 AM
From: RetiredNow	Read Replies (2) \| Respond to of 149317

That's correct. If you put in $100 of pretax money into a 401K, then all is subject to ordinary income tax upon withdrawal. If you put $100 in aftertax money into a Roth, then only the earnings on that $100 is subject to tax. If you have taxable account money, then you've already paid ordinary income tax and then you pay cap gains tax on the earnings.

To: manalagi who wrote (19805)	5/1/2008 10:57:52 AM
From: RetiredNow	Respond to of 149317

That's correct. If you put in $100 of pretax money into a 401K, then all is subject to ordinary income tax upon withdrawal. If you put $100 in aftertax money into a Roth, then only the earnings on that $100 is subject to tax. If you have taxable account money, then you've already paid ordinary income tax and then you pay cap gains tax on the earnings. If it were me, I'd have a flat cap gains tax of 15% on earnings on savings when those investments are sold and withdrawn for living expenses. But then I'd jack up ordinary income rates on current active income for folks who earn more than $250K per year. That way we don't punish those folks who diligently save and are responsible for their retirement. But we make up the tax revenues by taxing on current ordinary income at higher levels for the top 1% of earners.