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So you have learned about the pre-tax strategy of using a 401k, IRA, 403b, or 457 type plan. Did you also know that those plans are the IRS codes for the tax laws that are used for those plans? For each plan listed above, you put the contribution in an account, usually through payroll deduction, and the contribution and the earnings on that money are tax-deferred. So when do you pay the taxes? At distribution! That’s right, when you take the money out! You were told by someone you trusted you would probably be in a lower tax bracket at that time, too. Not the case, is it? Plus the amount you take out in distribution is a much larger amount then the contribution you put in (you hope) depending on how the money was invested.
Tax-Free Retirement uses an after-tax contribution (not the pre-tax) so the federal taxes are now paid FOREVER. The earnings grow tax-deferred, just like the plans already mentioned above, However, the big difference is at distribution. You pay NO federal income taxes. That is huge! Especially if the tax bracket goes up when you are in the distribution phase of your life. You won’t need to know what the federal tax bracket is if you utilize the tax free retirement because you won’t be paying it.
There are only a few ways to accomplish a tax-free retirement. When I meet with you as my client or a curious investor I will explain all of your options. Then you will tell me which one(s) you want to implement or continue using for your benefit.
Do you want to know whether a tax-free retirement is right for you and your family? We’ll get together for a confidential meeting to find out if it is right for you. The solutions are IRA Rescue and 401k makeover!