nun
Thinks s/he gets paid by the post
- Joined
- Feb 17, 2006
- Messages
- 4,872
My point is that deferring taxes is a strategy which can backfire if you don't manage it carefully. Only a word to the wise as YMMV.
If you end up having to do large RMDs tax deferral might well be a bad move and there's always those pesky unknown future tax rates. But tax deferral does give the advantage of compounding tax free gains. I'm in a situation where I earn far more than I spend so saving to tax deferred accounts greatly reduces my current tax bill, in fact without saving to tax deferred accounts my tax rate would be 23%, maxing them out I paid 13% tax last year. I also save after tax to fund my ER before 59.5 and the strategy then becomes reducing the size of the tax deferred accounts by ROTH rollovers to use up my deductions and exemptions and the lower rate tax brackets. This is a situation when i-orp.com becomes your friend.
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