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nico

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  1. My wife is a teacher who has been contributing to a 403b plan since the day she started four years ago. Fortunately for her, her plan is with the Vanguard Group and the fees are very low. We raise the question as to whether she should continue to contribute to her plan because of the new change in the tax law which lowered the capital gains rate to 15%. With that said, I have heard alot of financial people on television and on the radio state that 401k's, 403b's and even 529 plans have lost some of their advantages and aren't as attractive as they once were and advised that in some cases, an investor is better off investing in a taxable account through an index fund so that the money is not taxed at ordinary income tax rates and does not have alot of restrictions such as age, specific uses for the money such as education. Thereby giving investors more freedom and flexibility on how and when they want to spend their money. What they have not addressed is the benefit of investing money on a pre tax basis which reduces that investor's taxable income by the amount that he or she has invested in the plan. In our case, my wife puts the maximum in which this year amounts to $12,000.00. Had we not sheltered that money, our tax bill would have been higher. Isn't this still a good reason to invest in a 401k or 403b ? We also max out our Roth Ira's in addition to her 403b plan. Thank you for your responses it is greatly appreciated...
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