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Retirement tax questions
That comment applies to inherited traditional IRAs. One invests with the expectation of gains. If those gains occur inside the IRA, those gains will be taxable at ordinary income tax rates when eventually distributed. If those gains instead occur outside the IRA (because and are managed so that they are taxed at long-term capital gains rates, the amount lost to taxes will be lower. For example, leave $1,000 in a traditional IRA with average investment gains of 10% per year for 10 years, the distribution of all of it after 10 years will be the original $1,000 plus about $1,600 of gains, all taxable as ordinary income. If one instead takes a distribution of the $1,000 taxable as ordinary income and invest it in the same capital assets outside of the IRA for 10 years such that the gain qualifies for long-term capital gains treatment, the $1,600 will be taxable at the lower long-term capital gains rate. Still, depending on the tax bracket and the amount of gains, the time value of the money that would have to be used pay the tax on the $1,000 if taken out at the beginning of the 10 years might be greater than the eventual tax savings one would get from the $1,600 being taxed as long-term capital gains instead of ordinary income. Each situation needs to be evaluated depending on the actual tax rate and gains.