pvl (01/27/83)
I'm posting this to the net since I mailed it around about a month ago and it's surfacing again. YES: depending on your tax bracket, the return rate on a given investment, assumptions about you tax bracket in 10 years, etc... You CAN come out ahead with an IRA after about 7-10 years even if you take the money out and pay the tax and the penalty. The effect comes from 1) The earnings are tax deferred which means that they are compounded instead of being sucked up by the government. You can, of course get a non-IRA tax-free investment, but the return generally reflects the expected tax rate anyway (and an IRA is tax-deferred on ANY investment). 2) The money you put in is deductible up front. That means that for a 40% tax bracket, it costs you only $1200 to make an investment that would cost $2000 elsewhere (you get 40% back on your taxes). Hope this helps get me some good suggestions as to what to DO with my IRA money...Pete LaMaster BTL HO (201)949-0040