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Great question Greg ... That was what I PDF Print E-mail
Written by John D. Buerger, CFP®   
Friday, 04 December 2009 04:31
Great question Greg ... That was what I thought at first, but it actually doesn't work that way. The improvement of a 100% Roth IRA contribution over a 100% regular IRA contribution is only about 1/2% where the 3 Bucket approach can improve net wealth by 5%. The reason all three buckets works better is that the strategy maximizes the tax advantages in each one. Remember the cardinal rule - save the greatest amount of taxes (period) ... regardless of when you take the tax hit. An additional benefit - not having all your wealth in any one basket protects you from law changes regarding that type of account. If you had all your money in Roths and Congress decided they wanted to change the rules regarding their tax treatment (maybe taxing gains inside the Roth when you take the money out), that could prove to be hugely problematic.
This is a comment on "2½ Tax Planning Myths"

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