Re:Insurance is like gambling, don't overdo it
by gruez on Monday June 21, 2021 @09:12AM
(#27578794)
>The complicating issue here being that you’ll eventually pay income tax rates on those dividends instead of (usually) lower dividend tax rates.
This is the wrong analysis. While it's true that when you withdraw you pay taxes at the marginal rate, you also need to realize that your contributions are before tax. When you're withdrawing, you're not paying income tax rates on the gains/dividends, you're paying income tax that you previously deferred. The gains are still tax free.
This is the wrong analysis. While it's true that when you withdraw you pay taxes at the marginal rate, you also need to realize that your contributions are before tax. When you're withdrawing, you're not paying income tax rates on the gains/dividends, you're paying income tax that you previously deferred. The gains are still tax free.