Taxes

No, you can't completely get out of paying taxes in retirement, but you do have some control over when you pay those taxes. You can prepay your taxes before retirement by investing in a Roth IRA or 401(k), or you can defer paying taxes using traditional retirement accounts. Investing in tax-favored retirement plans and taxable accounts gives you the flexibility to decide which accounts to draw from (and how much resulting tax to pay) in a given year. Withdrawals from traditional retirement accounts become mandatory after you reach age 70 1/2.

( Baltimore Sun photo by Barbara Haddock Taylor / January 27, 2006 )

No, you can't completely get out of paying taxes in retirement, but you do have some control over when you pay those taxes. You can prepay your taxes before retirement by investing in a Roth IRA or 401(k), or you can defer paying taxes using traditional retirement accounts. Investing in tax-favored retirement plans and taxable accounts gives you the flexibility to decide which accounts to draw from (and how much resulting tax to pay) in a given year. Withdrawals from traditional retirement accounts become mandatory after you reach age 70 1/2.

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