Utilize taxadvantaged accounts for long-term savings from "summary" of The Tax and Legal Playbook by Mark J. Kohler
When it comes to saving for the long term, utilizing tax-advantaged accounts can be a game-changer. These accounts offer significant tax benefits that can help you grow your savings more quickly and efficiently. One of the most popular tax-advantaged accounts is the traditional IRA, which allows you to contribute pre-tax dollars that can grow tax-deferred until you start making withdrawals in retirement. This means that you can invest more money upfront since you won't have to pay taxes on your contributions until later.
Another popular option is the Roth IRA, which works in the opposite way. With a Roth IRA, you contribute after-tax dollars, but your withdrawals in retirement are tax-free. This can be a great option if you expect your tax rate to be higher in retirement than it is now. In addition to IRAs, 401(k) plans offered by employers are also excellent tax-advantaged savings vehicles. These plans allow you to contribute a portion of your salary on a pre-tax b...
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