I understand your concern as far as the taxes paid on taxable income. Think of it this way; when you were having the pre-tax contributions, that was less taxable income, so saved on taxes. Your contributions have grown and since in a retirement account you have not had to pay tax on the earnings, so saved on taxes.
Now that you withdraw you will pay tax on the earnings also, but your tax rate should be lower since you do not have other income, such as wages. Either way you would pay tax on earnings; each year if you had invested the money, or future when withdraw the earnings. The concept is that you should have less taxable income in your retirement years, which result in less tax due to a lower tax bracket.
I hope you find this helpful!
Connie
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