AXA 403b Rollover and Mass Mutual 457b Questions in 403(b) Forum Posted 16 hours ago · Report reply 44 minutes ago, tony said: Taxable and Roth accounts are a superior way to save. This is a complex topic, but I want to be really clear that tax advantaged accounts are virtually guaranteed to be superior to a taxable account. The only reason I qualify that statement is because I suppose the government could rewrite the tax code in unpredictably insane ways. This is true because in a taxable account you ALWAYS have to pay annual tax on the distributions (dividends and capital gains generated internal to the fund) the funds give you, but in a tax advantaged account you NEVER have to pay tax on distributions. So a taxable account has higher yearly expenses and as we all know lower expenses are superior. Within tax advantaged accounts there is the debate about which is best, Roth or Traditional. The answer depends on which option will generate higher tax bills and has nothing to do with when the tax is paid. The answer is unknowable for sure because it requires knowledge of the future. I generally view this as an optimization not to get too crazy about. At any rate, I argue Traditional is very likely superior for most people and somebody wrote a blog that essentially parrots my opinions. The reason I think Tony prefers Roth and Taxable over Traditional, and correct me if I’m not being fair, is because there is an emotional benefit to paying all (most?) of your tax up front and feeling like everything you have is truly yours. However, mathematically it doesn’t matter when you pay tax in a tax advantaged account, it only matters how much you pay. I’m more than happy to dive into the dirty details if anybody would like. 44 minutes ago, tony said: Taxable accounts is not taxed as income so you have some flexibility with losses and lower taxable rates when you sell This is another tricky topic. The tax code treats “ordinary income” differently than “capital gains”. They each have different tax rates (generally lower for capital gains), different income brackets, and different rules for achieving the 0% rate! Distributions from a taxable account are broken up into two buckets: qualified and unqualified. The qualified portion is treated as a capital gain. The unqualified portion is treated as ordinary income. Then when you sell shares in a taxable account they’ll either be considered “long term” or “short term” depending on how long you owned the shares. Long term gains are treated as capital gains and short term gains are treated as ordinary income. If you search my post history you’ll see me talking about how to pay 0%, or close to 0%, taxes in retirement (particularly early retirement). A taxable account plays a big role in 0% tax early in the FIRE years, but you begin to pay tax later on. In my first analysis (the software I’m writing is still incomplete) the taxable account accounted for something like 80% of my tax bill while the Traditional account made up the other 20%.