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After Tax Savings for Retirement
from:Most of us are familiar with pre-tax retirement savings programs like 401k’s and IRAs. These accounts are perfect for saving for retirement because they give you a tax break today, since any amount that you contribute is done on a “before tax” basis, reducing your taxable income for the year. In addition, interest accumulated on these accounts are not subject to taxation until you withdraw the funds for income during your retirement.
After tax savings accounts for retirement work in the opposite way. Often called Roth IRAs, these after tax accounts are funded using money that you are paying income tax on in the years that you contribute the money. So, contributing to a Roth IRA, or after tax savings account does not help you reduce your taxable income during the years that you’re working and contributing to them the way that traditional IRAs and 401k accounts do.
Instead, after tax savings accounts provide you with significant tax breaks during your retirement. You see, because you paid income taxes on the money you contributed to your after tax savings account during the year you contributed it, the money is not taxable when you withdraw it during your retirement. Not only is the money you contributed not taxed when you withdraw it, but the interest it has accrued during the years it has been invested is not taxable either.
So, contributing to an after tax savings account today helps reduce the amount of taxes you’ll pay during your retirement. This is beneficial because most of us try to live on a smaller income during our retirement years, and reducing the taxes we pay during our retirement can be a big help.
For a small monthly after tax contribution each month during your working years, you can be accumulating a very large tax free account to use during your retirement years. In the end, you’ll pay taxes on just a fraction of the amount in your account. This is in contrast to traditional IRAs and 401ks, where you’re really just delaying the payment of taxes since you eventually will pay taxes on every bit of money in these accounts, even the interest that has accrued.
Most financial experts recommend that you plan for your retirement using a combination of before tax accounts like 401ks and traditional IRAs along with after tax savings accounts or Roth IRAs. Using this combination helps you to save for your retirement in a way that helps you avoid some taxes both today and during your retirement years. This combination is the best way to save money now and be ready for a financially comfortable retirement, too.
Energy Savings Tax Credit News
Obama calls for keeping production tax credit to save clean-energy jobs - Boston Herald
 CBS News | Obama calls for keeping production tax credit to save clean-energy jobs Boston Herald The production tax credit, created in 1992 and extended nearly continuously since then, gives wind farms a credit of 2.2 cents per kilowatt-hour of energy produced. Industry advocates said it spurred $15.5 billion a year in private investment in the US ... On Obama's Congressional "To-Do" list: Green-energy tax credits In Iowa, Obama Calls On Congress to Act on Clean Energy Tax Credits Obama: Wind Industry Jobs In Jeopardy If Congress Doesn't Act |
Obama Urged To Take Action on Biodiesel - Hoosier Ag Today
Obama Urged To Take Action on Biodiesel Hoosier Ag Today ... invest in clean energy by passing legislation that will extend the Production Tax Credit (PTC) to support American jobs and manufacturing in the wind industry alongside an expansion of the 48C Advanced Energy Manufacturing Tax Credit that supports ... |
Obama to campaign in Iowa, promote energy plan - BusinessWeek
Obama to campaign in Iowa, promote energy plan BusinessWeek The president plans to urge Congress to renew the federal production tax credit for the wind industry, which is set to expire at the end of the year, and expand a tax credit that supports clean energy manufacturing. Obama's "to-do list" includes a ... |
Boaties critical of "sly tax" and added costs - ABC Online
Boaties critical of "sly tax" and added costs ABC Online TOM FORBES: Marine transport operators have access to fuel tax credits which allow them to claim a rebate of just over 38 cents per litre. But from July that will drop to 32 cents a litre. It's part of the Federal Government's clean energy future ... |
14 US Wind Energy Leaders Meet at White House over Call to Extend Wind ... - CleanTechnica
14 US Wind Energy Leaders Meet at White House over Call to Extend Wind ... CleanTechnica Extension of the tax credit appears on a “To-Do List” for Congress and the Administration to act on by August to create jobs and help the middle class. Industry leaders explained that the extension is urgent to keep its 75000 jobs, ... Looking to Extend Wind Production Tax Credit CEO cites wind power's benefits in urging PTC extension Obama, Wind Industry To Congress: Expiration Of Clean Energy Incentives Will ... |