Uncle Sam loves Qualified plans. He basically has your retirement money mortgaged and holds a lien against it with a tax liability.
Here is the main issue with Qualified Retirement Plans that no one talks about:
With a Traditional IRA or 401K, you are simply deferring taxes to an unknown amount on the entire growth of your account.
If you are at a 33% tax rate and put $6,000 (the seed) into an IRA/401K, you would have received a $2,000 deduction. However, if that account were to grow to $100,000 (the harvest), you will now have a $33,000 tax liability.
If you are at a 33% tax rate and put $6,000 (the seed) into an IRA/401K, you would have received a $2,000 deduction. However, if that account were to grow to $100,000 (the harvest), you will now have a $33,000 tax liability.
You have basically traded a $2,000 deduction, today, and converted it to a $33,000 tax liability, tomorrow.
Contact Family First Life of Maryland to meet with an advisor to discuss a Tax-Free Retirement option!
Michael E. Pfeil
Family First Life of Maryland
mpfeil@familyfirstlifemd.com
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