What is the difference between before and after tax

Maximizing your pre-tax deductions, compounded with matching employer contributions could be a great start to an investment strategy that could work well for you if done right. If you want to learn how you could be making the most of your pre-tax deductions, contact an SJK Wealth Management advisor, we would love to get started with you today. This information is not intended to be a substitute for specific individualized tax advice.

We suggest that you discuss your specific tax issues with a qualified tax advisor. Health Care, Vision, and Dental Insurance premiums are pre-tax deductible.

These contributions are non-taxable and they are paid to the appropriate accounts before taxes are assessed. Flexible Savings Accounts are often found under the pre-tax bracket as well.

Pre-taxed investments are a common method used by the government to encourage people to save money ahead of time, rather than later. A key benefit of a pre-tax retirement savings account is the potential to reduce your taxable income today, and not pay taxes until you withdraw your money.

A good example of an after-tax retirement account would be a Roth IRA. For example, during the accumulation phase the time when you are building up your retirement savings any contributions that you make to your Roth IRA are made with after-tax dollars. In other words, you'll have already paid taxes on those contributions. Therefore, when retirement rolls around, qualified distributions will be tax-free in accordance with IRS guidelines.

One of the perks of receiving after-tax benefits is being able to better hedge against the possibility of being in a higher personal tax rate when you retire. For example, if you have a pre-tax k account and your tax rate in the future turns out to be higher, you may find yourself paying more taxes when you withdraw your money.

There are many factors to consider regarding taxes during retirement. Do some research to understand some important elements that may impact the level of taxes you pay. Investigate tax brackets - Understand tax brackets and income thresholds for each to get a baseline of the taxes you'll pay based on your retirement income. As you make withdrawals from your retirement accounts, stay mindful of those thresholds so you don't inadvertently advance yourself into a higher tax bracket. Research tax advantages of different types of income - Income from selling a home that has increased in value may be sheltered up to a certain amount.

Capital gains from an investment in property, gold or other capital asset may be taxed at a lower rate than ordinary income. Start early - Tax planning for retirement starts now.

Timing some of your tax savings now and some later could help you balance the effects of taxes, no matter what happens in the future. You can roll your pretax account to an eligible retirement plan or IRA. This material is intended for general use with the public. Lincoln does not provide investment advice, and this material is not intended to provide investment advice.

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