Posted by Art_PA on 12/4/11 11:06am
Msg #405722
Pay Yourself First - Retirement Plans
This is a good time to do tax planning if you can do so. I assume from reading your posts that most of you are not "greedy evil millionaires", and that those of you who are somewhat successful believe that you are paying at least a more than "fair share" of your income to federal, state, and local governments. If you believe you are not paying enough taxes, disregard the rest of this message.
So you should give some thought to reducing the taxes you pay by setting up a SEP IRA or individual 401(k). If you are over 55 you can make an additional $5000 contribution to a 401(k). A contribution will reduce the tax you pay to the IRS substantially, and will grow tax deferred until you make withdrawals after you reach 70 1/2. You can set these plans up through a broker or any investment company, and it is best to do so this year, making a small contribution to open the account, and then you will be able to fund it when you know exactly how much you can contribute when your do your taxes.
You can also establish Roth IRAs which do not reduce current taxes, and are funded with after tax dollars, but are not taxed when you make withdrawals, assuming the rule are not changed by a future Congress.
Remember that you don't get a superbox in heaven by paying more tax than you have to pay.
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