Roths Worth Another Look

Which Investments Where?

That still leaves some unanswered questions for those who have both types of plans. Because traditional after-tax plan withdrawals all are taxed as ordinary income, you lose the benefits of the lower capital gains tax rates, and get no tax breaks for losses. Many say that's an argument for putting income-earning investments inside your traditional retirement plans and taking capital risks outside your retirement accounts.

But the real benefit of all of these retirement plans is the tax-deferred growth you can amass over the years. And getting growth requires a commitment to a diversified equity portfolio. I'd argue that it's more important to get the growth over the long run than to worry about the capital gains taxes vs. ordinary income.

So don't get hung up on which type of investment goes into which account. Just diversify appropriately across all your retirement accounts, and base your asset allocation on your age and goals, rather than the pretax or after-tax component.

I never heard anyone complain about retiring with too much money! And now you have a chance to have both a lot of money and no taxes on all that growth when you retire. It's an opportunity you can't afford to miss. And that's The Savage Truth.