Encore: The money in your 401(k) and IRA accounts doesn’t belong entirely to you

I keep worrying that people approaching retirement with 401(k) and IRA balances don’t realize that they owe taxes on their accumulations. I’m sympathetic. It’s hard to accept that the pile that we’ve contributed to and nursed over our working life is not all ours.

Of course, we have all benefited throughout the years by not having to pay taxes on contributions paid into our traditional 401(k) plans and IRA accounts and on the investment returns on those contributions. Deferring taxes for decades has real value. A little algebra reveals that the benefit is equal to exempting investment returns on plan assets from taxation.

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