Welcome to Tax Saving Guide
Reasons Why Higher Taxes On Tabacco Would Not Reduce Smoking 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.
The 401k – Tax Free or Tax Deferred Savings?
from:We commonly refer to our 401k accounts as tax free savings. And, it’s true that we don’t pay taxes on any money we contribute to our 401k accounts during the year we contribute it. However, it’s also important to realize that we do pay taxes on our 401k accounts during retirement when we withdraw the money for our living expenses. Therefore, a traditional IRA or 401k account is really a tax deferred savings account, not a tax free one.
Now, this doesn’t mean that 401k accounts or IRAs are bad. In fact, they are, and should be, the cornerstone of retirement planning. But it is important to understand that you will pay taxes on every dime that you withdraw from your 401k account – even the interest you’ve earned over the years. As you withdraw, this money becomes taxed just like any other income you receive. So, you’re deferring the tax on the money until you’re using it – hence the name tax deferred savings. It’s also likely that you pay fewer taxes on this money than if you had paid taxes on it while you were working. Most of us have a lower income during our retirement years, so we pay taxes in a lower tax bracket. This means that our tax deferred savings will likely get taxed at a lower rate than at the time we earned it.
But, there is a way to have some actual tax free savings for your retirement, rather than having all of your retirement money in a tax deferred savings status. This is the Roth IRA account. With a Roth IRA, you invest money into your retirement account on an after tax basis, not a pre-tax basis. Because you invest after tax money in a Roth IRA, your withdrawals are tax free. Even earnings on your contributions are tax free, so long as you wait until age 59 ½ to begin withdrawing these earnings. Therefore, Roth IRAs can provide some actual tax free savings, in contrast to traditional IRAs and 401ks, which are just tax deferred savings.
Another advantage to the Roth IRA is that it is free from the minimum withdrawal requirements of the traditional IRA or 401k. Under current laws, beginning at age 70 ½, holders of an IRA or 401k account must begin taking minimum withdrawals from the account. With a Roth IRA, you are never forced to make withdrawals.
Most financial planning experts recommend a combination of Roth and traditional IRAs to plan for a secure retirement. Check with your financial advisor to come up with the best retirement accounts for you.
Reasons Why Higher Taxes On Tabacco Would Not Reduce Smoking 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/
Reasons Why Higher Taxes On Tabacco Would Not Reduce Smoking News
An ‘09 prediction about cigarette tax - DeSoto Times Today
An ‘09 prediction about cigarette tax DeSoto Times Today, MS - The increase would be higher for cigarette brands produced by companies that didn't pay into Mississippi's 1997 lawsuit settlement with the tobacco industry ... |
7 Reasons Why We Suffer Heart Attacks By: Emilia Klapp, RD, BS - Healthy Wealthy n Wise
 Healthy Wealthy n Wise | 7 Reasons Why We Suffer Heart Attacks By: Emilia Klapp, RD, BS Healthy Wealthy n Wise, WV - Smoking causes the narrowing of the blood vessels that carry blood to our legs and arms. I know that to stop smoking is not a piece of cake but you have to ... |
Budget blues lead lawmakers to eye raising cigarette tax - Ocala
Budget blues lead lawmakers to eye raising cigarette tax Ocala, FL - A cigarette tax increase will fall disproportionately on low-income Floridians who are more likely to smoke and would pay a far higher percent of their ... Can 'sin' taxes be a savior for Florida's ailing budget? |
State must get serious about fighting smoking - The State
State must get serious about fighting smoking The State, SC - You don’t even have to spend a dime to reduce smoking. One of the most effective anti-smoking tools is a high cigarette tax. It works particularly well on ... |
Where's the tobacco money? - Denver Post
Where's the tobacco money? Denver Post, CO - The remainder of the tobacco-settlement money has gone to fund dozens of other programs mostly related to health but not directly to smoking. ... |