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

As it turns out, the RRSP is ideal if you're in a high tax bracket now and expect to end up with a solid middle - class retirement.

The tax situation is also difficult to assess since there are so many variables but the general rule is if you expect you are in a higher tax bracket now than you will be at retirement, then you are better off going with the standard 401 (k).

For these accounts, the gamble is this: do you think you're going to be in a higher tax bracket now or later.

There are tax advantages to deferring income if you are in a high tax bracket now.

Not exact matches

But now there are four capital gains rates in effect: 0 percent for those in the lowest two brackets, 15 percent for middle - income taxpayers, 18.8 percent for those in the 15 percent bracket who also owe the 3.8 percent Medicare tax, and 23.8 percent for high - income earners who pay the 20 percent capital gains rate plus the 3.8 percent Medicare tax.

Typically, if you're young and in a lower earnings bracket than you expect to be later in life, a Roth may make sense — you'll forgo tax deductions now, but later, when you're in a higher bracket, you won't pay taxes on distributions.

And now that our careers are going, we're looking at maxing out two traditional 401Ks and two Roth IRAs this year, and we see the Roth IRA portion as a small hedge against rising future tax rates (or what I think is a bit more likely to happen — tax brackets that don't keep pace with inflation, so keep sucking in more and more people to higher brackets).

If you believe your tax rate is lower now than it will be when you start taking withdrawals, a conversion may look promising because you'll pay conversion taxes while you're in a lower tax bracket and enjoy tax - free Roth IRA withdrawals later (when the higher tax bracket won't matter).

If you really need a tax break now because your income and tax brackets are high, and you think that they will be lower in the future, then the 401k may be the one to max out first.

But low postdoc salaries mean you will (hopefully) be in a higher tax bracket when you retire than you are now.

If you believe your tax rate is lower now than it will be when you start taking withdrawals, a conversion may look promising because you'll pay conversion taxes while you're in a lower tax bracket and enjoy tax - free Roth IRA withdrawals later (when the higher tax bracket won't matter).

RRSP contributions are also generally the better option if you fit the classic RRSP profile of saving for retirement while being in a fairly high bracket now and a lower tax bracket in retirement.

On the other hand, if you're in line for a promotion and expect to be in a higher tax bracket next year, it would make more sense to realize the entire gain now, which would allow you to report it in a year when you'll pay less tax.

Paying taxes now, as you do with a Roth IRA, protects you if you expect to be in a higher tax bracket when you retire.

And for the case of someone with no spare RRSP room and non-registered investments, there's a similar dilemma of whether to realize the gains now in a low bracket, paying tax now so you have less to continue investing, but resetting your cost basis higher for the future.

If your wife was going to be in a higher tax bracket in retirement — perhaps you have a large RRSP or defined benefit (DB) pension and can split your withdrawals with her in retirement — drawing down her RRSP now might make sense as well.

I think I understand your argument, BUT you make two assumptions and fail to note a third: 1 - Paying a 25 % tax now if you think you will be in a higher bracket later, 2 - That tax rates will remain stagnant or go down, 3 - failing to account for the other advantages of Roth accounts particularly for estate purposes.

The base case is where you have some money and are in a low tax bracket now, but will be in a higher one soon.

Think you'll be in a higher tax bracket in retirement, or if you're temporarily in a lower tax bracket now

AC: And in some cases, we see people in higher bracket markets because they have Social Security, maybe they have pensions, and maybe they did a good job saving, and now their required minimum distributions push them into higher brackets, and those are folks that desperately would prefer or would have liked to have some tax diversification.

Also, consider contributing to an IRA, ideally through a Roth account — you'll pay taxes now on contributions but withdraw tax - free later when you might be in a higher tax bracket.

The Roth IRA assumes you are going to retire in a higher tax bracket as you build wealth and allows you to pay taxes on the money you invest now.

If you're in the top tax bracket and every gain now leads to high theft (uh, taxes), then it may be wise to offset gains with losses from dead - beat stocks (ones that you want to get rid of anyway).

For someone that is closer in age to retirement and in a higher tax bracket now, a Roth IRA is less attractive than it is for you.

Say, if I'm putting money in some index funds for 5 years, and in 5 years I'll probably be in a higher tax bracket than now.

Many people argue in favor of the Roth because they assume they'll be in a higher tax bracket in retirement than they're in right now.

There is a good possibility that I will be in a higher tax bracket at retirement, so I'll pay the taxes now.

On the other hand, if you're in a low tax bracket today, you might consider a Roth now, when a lowering of your gross income will not be as significant a tax benefit as it might be later on, if you find yourself in a higher bracket.

We are going to be in a higher tax bracket when I retire because of both of our pensions (and SS, rental income)-- so it makes sense to get our money out now and use it to live and pay off rental properties for even more cash flow.

If you're in the classic case where RRSPs work best — you earn a fairly high income now but expect to be in a lower tax bracket in retirement — RRSPs beat the tax benefits from your CPP contributions hands down.

Conversely, those who are in the highest tax bracket are now paying a higher rate of taxes, have less disposable income, and may see their guideline amounts decrease.

Therefore, you'd rather your contributions be taxed now, in a lower tax bracket, and not have to worry about it when you're older and likely paying higher taxes.

This means you don't pay income tax on this money now, while you're likely in a higher income bracket.