After all, if for some reason I don't end up being
in a lower tax bracket during retirement, I suppose it will be a good problem to have.
If you can begin to draw on her RRSP savings now while her income and her tax rate are low, it may help keep
her in a lower tax bracket during her 70s and 80s by drawing down a bit now during her 60s.
On the other hand, if you expect to be
in a lower tax bracket during retirement, then deferring taxes by investing in a traditional 401 (k) may be the answer for you.
The contributor receives the short term benefit of the tax deduction for the contributions, while the annuitant, who is likely to be
in a lower tax bracket during retirement, receives the income and reports it on his or her income tax and benefits return.
Deferring taxes allows a person who is will be
in a lower tax bracket during retirement, than while he is saving up for retirement, to benefit from a lower tax rate.
If there is growth, the Tradtional IRA fares better than the Roth IRA only when the taxpayer is
in a lower tax bracket during the withdrawal period.
Not exact matches
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.
When you finally withdraw the money, you'll have to pay
tax, but for most Canadians they'll end up paying less
tax because their income
in retirement is less than
during their working years, putting them
in a
lower marginal
tax bracket.
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.
Another strategy to minimize income
taxes on your RRSP / RRIF at death is to take annual withdrawals from your plan
during your lifetime to maximize the income that will be
taxed at
low rates by forcing additional withdrawals
in years you are
in a
lower tax bracket.
With your drop
in income, you're now
in a
lower tax bracket — which means fewer
taxes on any home sale
during this period.
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.
For those
in a higher
tax bracket who believe they may be
in a
lower one
during retirement, this can be an important consideration.
With a traditional IRA, eligible contributions are made
tax - free and are only
taxed when withdrawn
during retirement, often when you're
in a
lower tax bracket.