Most successful individuals today will find themselves with a pile of money in their qualified retirement plans.
Qualified retirement plans include
but are not limited to 401(k) plans, 403(b) plans, 457 plans, IRAs,
Roth IRAs and those fortunate ones who have a defined benefit pension
plan. More on defined plans later.
These programs are what we call government plans. The government plans let you put aside a portion or percentage of your gross income after tax (deductible), and it grows tax-deferred until you withdraw it.
It also comes with the usual government restrictions, such as: if you withdraw money prior to 59 1/2, you pay a penalty. If you fail to make withdrawals at 70 1/2, you pay a penalty. More later on the penalties. For those of you who are screaming, “I know the penalties or I know how to avoid the penalties!” you will get your time in future discussions. The largest penalty is the tax bracket you will be in when you begin to withdraw the money. You are betting that you will be in a lower bracket; the I.R.S. is betting you will be in a higher bracket.
These programs are what we call government plans. The government plans let you put aside a portion or percentage of your gross income after tax (deductible), and it grows tax-deferred until you withdraw it.
It also comes with the usual government restrictions, such as: if you withdraw money prior to 59 1/2, you pay a penalty. If you fail to make withdrawals at 70 1/2, you pay a penalty. More later on the penalties. For those of you who are screaming, “I know the penalties or I know how to avoid the penalties!” you will get your time in future discussions. The largest penalty is the tax bracket you will be in when you begin to withdraw the money. You are betting that you will be in a lower bracket; the I.R.S. is betting you will be in a higher bracket.
Let’s be honest here, this discussion will continue and I’m sure get pretty lively. However, how often has the government given you an opportunity to pay less in taxes??? To be continued ...
Go to enspheremg.com to sign up for future blogs and tell Chris, "I want to know my future tax bracket when I retire!" Remember, we can make a best guess based on known personal data. Get your free report today!
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