Distributions From an IRA

Great! You have a few million in an IRA or 401k.  What can you do with all that money?  When you take a distribution after retirement age, you owe both federal and state income tax on it.  You could take out a couple million and pay 35% in taxes.  With that you can buy an estate in Wyoming, a nice house in Boise or Maui or a shabby townhouse in San Francisco.  But the tax consequences are substantial.   It is not like having several million in a savings account. You should have no problem borrowing money with that lump on your assets sheet but it is not quite as convenient as a huge savings account.  You can move assets from one mutual fund to another without it being considered a distribution. 

Suggestion: along with making the maximum contributions to a 401k, put taxed money (unlike your 401k contributions and employer matching funds which are not taxed) into a completely separate account.  Buy aggressive mutual funds in that account.  When you need a lump of cash at retirement age, sell some of those mutual funds.  You will owe capital gains taxes, but not income taxes when you take that money out, and long term capital gains taxes are much lower than income taxes).  

And again, thanks to whichever of you steered me towards the Black Rock fund last November.  It has already grown 10% in about half a year.