Sentences with phrase «in a lower tax bracket today»

«You'd better believe you're in a lower tax bracket today than you will be when you withdraw the money,» said Spiegelman, adding, «Because as the saying goes «Never pay a tax today that you can postpone to tomorrow.»»

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.

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.

Not exact matches

Most households depend on a 401 (k) plan to save for retirement on the grounds that they receive a tax deduction today and pay ordinary income taxes when they take distributions later, presumably when they are in a lower tax bracket.

But at that point, I'm fairly confident I'll be in a lower tax bracket than I am today.

In today's low - rate environment, even investors in the lowest tax bracket derive an income benefit from municipal bond tax - exemptioIn today's low - rate environment, even investors in the lowest tax bracket derive an income benefit from municipal bond tax - exemptioin the lowest tax bracket derive an income benefit from municipal bond tax - exemption.

If your income is low today and you expect your tax bracket to be higher in retirement, then you're better off with TFSAs, because your RRSP refund won't be as large and you'll avoid a larger tax hit down the road.

Roth IRAs are geared towards people with low tax brackets today that might increase in retirement, and as such, only people with income under a certain level can contribute.

Tax deductions today when your income and tax bracket are high are beneficial if you can take withdrawals in the future at a lower income and tax brackTax deductions today when your income and tax bracket are high are beneficial if you can take withdrawals in the future at a lower income and tax bracktax bracket are high are beneficial if you can take withdrawals in the future at a lower income and tax bracktax bracket.

We will use today's tax brackets as an example, but remember that taxes are at historical lows, so they could rise in the future.

A key factor is whether you think your tax bracket in retirement will be higher or lower than it is today.

Conversely, if you think you'll be in a lower bracket, you should opt for the traditional IRA, taking a tax deduction at your high tax rate today while knowing you'll pull those dollars out of your IRA at a lower tax rate once you're retired.

Note: If you expect to be in a lower tax bracket in retirement, paying taxes today at a potentially higher rate may not make sense.

On the other hand, if you expect to be in a lower tax bracket in retirement, paying taxes today at a potentially higher rate may not make sense.

The benefit of an RRSP is that you deduct contributions today and defer taxes until your retirement, when you will likely be earning less money and may be in a lower tax bracket.

Ultimately, then, the goal of partial Roth conversions is to find a balance, where the converted amount is low enough to avoid top tax rates today, but not so little that the remaining retirement account balance plus compounding growth causes it to be exposed to top tax brackets in the future, either.

For IRA accounts that are projected to be large — where RMDs can propel the IRA owner into the top tax brackets — a partial Roth conversion is appealing to benefit from lower tax brackets today and avoid the higher ones in the future.

The end result — by doing systematic partial Roth conversions for several years in a row, it's possible to remain in (and fully utilize) the lower tax brackets, while avoiding higher tax rates today, and whittling down pre-tax retirement accounts to the point that RMDs won't be subject to higher tax rates in the future, either!

It doesn't fit the mold of most of the other ways to reduce your taxable income, but it is still a way to receive compensation from your employer today, and not pay tax on that compensation until some future date (possibly when you are retired and in a lower tax bracket).