6 tax moves to make before the end of the year

6 tax moves to make before the end of the year

Motley Fool

Be Smart About What You Hold in Your Roth IRA

In November 1789, Benjamin Franklin lamented in a letter to a friend that there were only two certainties in life: death and taxes. One such law, the Taxpayer Relief Act of 1997, introduced the Roth IRA — a highly tax-advantaged savings vehicle that middle-class Americans could use to prepare for retirement. Unlike a traditional individual retirement account (IRA) where savers contributed pre-tax dollars, got access to tax-deferred growth, and then faced taxation upon withdrawals in retirement, taxpayers saving in a Roth IRA would contribute after-tax dollars upfront. In exchange, Roth funds would be permanently sheltered from federal income tax — allowing savers to enjoy both tax-free growth and tax-exempt withdrawals.

Post a Comment