Sentences with phrase «be in a higher tax bracket during»

This might work fine if you are in a lower tax bracket today and believe you'll be in a higher tax bracket during retirement.

If the employee is in a higher tax bracket during retirement than he is when he is putting money in the Roth 401 (k), the plan allows him to pay a lower tax rate than he would in a regular 401 (k)-- since withdrawals during retirement are tax free.

This is usually because of the investor getting the initial tax deduction while they're in a higher tax bracket during their earnings years.

Not exact matches

You don't pay income tax on the money when you contribute it (during your working life when your salary is high and you are in a high percentage tax «bracket», i.e. Federal tax is 25 - 33 % and state tax is 0 - 12 %).

The upshot of all this is that people who expect to be in the 25 % bracket or higher during their retirement years should strongly consider a Roth conversion even if the rate of tax on the conversion is as many as ten percentage points higher, provided they can pay the conversion tax with money that would otherwise remain in a taxable investment account and their investment time horizon is a long one.

For some taxpayers, the immediate tax deduction is more important during higher income earning years and less relevant during retirement when they are in a lower tax bracket.

Assuming that during your working years, you are in a higher tax bracket than you will be in upon retirement, this will give you an overall tax saving.

For those in a higher tax bracket who believe they may be in a lower one during retirement, this can be an important consideration.