Taxes: Pay Now or Pay Later

A big part of protecting your 401(k) and IRA accounts takes place when you’re nearing retirement—planning for taxes. Arranging the investments in your accounts to balance the tax benefits both now while you’re working and after you retire is an important part of providing liquidity for nonmonthly expenses such as home repairs and car purchases, as well as making sure you don’t pay more than your fair share of taxes on your regular monthly withdrawals.

Playing the Brackets

Income tax and capital gains tax rates are likely to be the same or higher in the future, so you need to use the years before you retire to make sure you’ll have a tax-saving selection of options from which to draw income in retirement. Aim to ...

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