Local Voices ? When IRAs, 401(k)s, and Other Tax-sheltered ...

Nov 03 2012

Each year about this time, men and women start off talking about and contemplating items like IRA contributions. Most of the time, tax-sheltered investments make excellent sense. The federal and state governments have developed their tax laws to encourage such cost savings. Even so, that said, there are 3 scenarios in which it could be a poor concept to use tax-sheltered investments:

You know youll need the money early best annuity rates

In this case, it could not be a very good concept to lock away income you may want before retirement since there is normally a ten percent early-withdrawal penalty paid on cash retrieved from a retirement account just before age 59 1/2. But you will also need to have income right after you retire, so the What if I want the income? argument is a lot more than a small weak. Yes, you may possibly need to have the funds ahead of you retire, but you will absolutely require money following you retire.

You dont need to have to conserve any much more for retirement

Using retirement arranging vehicles, such as IRAs, may possibly be a affordable way to accumulate wealth. And the deferred taxes on your investment earnings do make your cost savings develop much far more speedily. Nonetheless, if youve currently saved adequate money for retirement, its attainable that you should take into account other investment options as well as estate preparing troubles. This specific case is beyond the scope of this book, but if it applies to you, I encourage you to consult a excellent personal monetary plannerpreferably a single who charges you an hourly fee, not one particular who earns a commission by selling you economic items you might not want.
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Your tax rate will rise in retirement

The calculations get tricky, but if youre only a handful of years away from retirement and you believe income tax rates will be going up (perhaps to deal with the enormous federal-budget deficit or since youll be paying a new state earnings tax), it may not make sense for you to save, say, 15 percent now but pay 45 percent later.

Source: http://www.packetinsider.com/blog/localvoices/?p=1148

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