The Truth About Personal Finance (Collection)

Truth 39. Increasing tax brackets

The good news is that with a traditional IRA or traditional 401(k), your investments grow tax deferred until you take money out of the account. While anything you take out is subject to income tax, the rest continues to grow on a tax-deferred basis. Because tax deferral is considered such a good thing, many people put off taking anything out of their traditional IRAs or traditional 401(k)s until they reach the age of 70 1/2, at which time the law requires you to begin to take money from these accounts. The minimum amount that you must take each year, once you have reached the age of 70 1/2, is easily determined by using simple IRS charts. (How often do you see the words IRS and simple in the same ...