Welcome to Tax Saving Guide
401 K Pre Tax Savings Plan Article
. For a permanent link to this article, or to bookmark it for further reading, click here.
You may also listen to this article by using the following controls.
After Tax Savings for Retirement
from:Most of us are familiar with pre-tax retirement savings programs like 401k’s and IRAs. These accounts are perfect for saving for retirement because they give you a tax break today, since any amount that you contribute is done on a “before tax” basis, reducing your taxable income for the year. In addition, interest accumulated on these accounts are not subject to taxation until you withdraw the funds for income during your retirement.
After tax savings accounts for retirement work in the opposite way. Often called Roth IRAs, these after tax accounts are funded using money that you are paying income tax on in the years that you contribute the money. So, contributing to a Roth IRA, or after tax savings account does not help you reduce your taxable income during the years that you’re working and contributing to them the way that traditional IRAs and 401k accounts do.
Instead, after tax savings accounts provide you with significant tax breaks during your retirement. You see, because you paid income taxes on the money you contributed to your after tax savings account during the year you contributed it, the money is not taxable when you withdraw it during your retirement. Not only is the money you contributed not taxed when you withdraw it, but the interest it has accrued during the years it has been invested is not taxable either.
So, contributing to an after tax savings account today helps reduce the amount of taxes you’ll pay during your retirement. This is beneficial because most of us try to live on a smaller income during our retirement years, and reducing the taxes we pay during our retirement can be a big help.
For a small monthly after tax contribution each month during your working years, you can be accumulating a very large tax free account to use during your retirement years. In the end, you’ll pay taxes on just a fraction of the amount in your account. This is in contrast to traditional IRAs and 401ks, where you’re really just delaying the payment of taxes since you eventually will pay taxes on every bit of money in these accounts, even the interest that has accrued.
Most financial experts recommend that you plan for your retirement using a combination of before tax accounts like 401ks and traditional IRAs along with after tax savings accounts or Roth IRAs. Using this combination helps you to save for your retirement in a way that helps you avoid some taxes both today and during your retirement years. This combination is the best way to save money now and be ready for a financially comfortable retirement, too.
401 K Pre Tax Savings Plan Specific Links
Connect at Current.com
- Stay current! All the Latest News and Videos: Entertainment, Politics, Sex, Tech, and Music. See whats new at Current.com.
-- http://www.current.com/
Watch Free Videos At Mevio!
- Tons of Free Videos, Only At Mevio.com
-- http://www.mevio.com/
Howie Mandel & The Talking Pine
- Howie Mandel tries to come up with a holiday campaign for Buy.com. Buy.com has millions of items at amazing prices, free shipping, video reviews, over 20 major categories of products.
-- http://www.youtube.com/
Free Tech and Gadget Reviews!
- Watch GeekBrief With Cali Lewis on Mevio!
-- http://www.geekbrief.mevio.com/
Free tech talk and news video!
- Watch Tech5 with John C. Dvorak now!
-- http://www.tech5top5.mevio.com/
401 K Pre Tax Savings Plan News
Hot off the Presses - Planadviser.com
Hot off the Presses Planadviser.com, CT - The materials start with an assessment of the person’s financial status and move on through budgeting and an explanation of the 401(k) plan. ... |
10 Year-End Tax Planning Tips from Grant Thornton - SmartPros Accounting
10 Year-End Tax Planning Tips from Grant Thornton SmartPros Accounting - Traditional IRAs share the tax benefits of traditional 401(k)s, while Roth IRAs share those of Roth 401(k)s. However, IRA accounts are established outside ... |
Draining Your Retirement - Planadviser.com
 Planadviser.com | Draining Your Retirement Planadviser.com, CT - Now, experts observe, the home-ownership issue driving pre-retirement 401(k) distribution is more likely to be one of avoiding foreclosure on an existing ... |
Open Enrollment a Time to Trim Tax Bill - MarketWatch
Open Enrollment a Time to Trim Tax Bill MarketWatch - Employer-sponsored savings plans are one of the easiest ways for taxpayers to save for retirement. 401(k)s, 403(b)s, thrift plans, SEPs, ... |
What can I do now to help reduce my taxes that are due next spring? - Indianapolis Star
What can I do now to help reduce my taxes that are due next spring? Indianapolis Star, United States - If you have your own health insurance plan, set up and fund a pretax health savings account. Ask your employer if this can be done for your group health ... |