10 ways to tax-proof your retirement

Use these tips to minimize the amount of taxes you'll pay during retirement.

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152Comments
Jan 10, 2014 10:26AM
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There is no way to "tax proof" your retirement.  And here is how:

401(k) - You take tax benefits on the income today, but pay the taxes when you retire.

IRA - Same as 401(k).

Roth IRA - You pay the taxes today, but the distributions are tax free (because you have paid the taxes already).

These plans do not create "tax proof" income.  You pay the taxes regardless.  Your decision is WHEN to pay the taxes.

Plus, these plans were created to keep people from having to pay taxes twice on the same money (when you earn it, and when you take it out of your "savings" account).
Jan 18, 2014 8:57AM
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I got a better idea... disband the IRS, Do away with "Income Tax/Capital Gains", institute a fix flat rate National  Sales Tax.... say 5%. And be done with all this
Jan 10, 2014 1:48PM
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There is a problem.  What's good today isn't necessarily good tomorrow.  Especially when you have a group that is looking for anyway possible to raise taxes (now they call them "revenue enhancements" - how's that for PC) so they can pay for their bloated administration, czars, investigations, healthcare, and all the pseudo-intellectuals that they hire that are much smarter than everyone else.  Somebody has to pay for it - it doesn't come from thin air (although some people seem to discount this).  A long time ago my father told me that Congress was going crazy over seeing so much money being saved into IRAs and 401Ks - they wanted access to that money.  There are many in Congress that feel that THEY would be best to make these decisions for the individual.  Eventually, they'll find a way to change the laws and grab - it is a given.  The more programs they enact, the greater their desire to take it.
Jan 10, 2014 8:49AM
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I wonder if anyone is making a living giving such astute advice!  State what everyone already knows and cash a check.  New mantra for writers.  Mike

 

Jan 10, 2014 1:42PM
Jan 10, 2014 7:46AM
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I didn't see many tips to reduce taxes during retirement - the ROTH accounts certainly do that...and nondeductible contributions do that, because, those contributions do not reduce your tax bill in the current year.  Remember, you are going to get bit on the front end or the back end - one or the other.  If you believe tax rates will rise in the future, rely heavier on the nondeductible account and less on the deductible.  It is wise to have a pool of funds in each type from which to withdraw so you have the flexibility to tailor withdrawals to suit your needs and satisfy a lower tax bill. My view, tax rates will rise, so I do make sure I also have some already-taxed savings at my disposal. It is quite easy to avoid stiff penalties for mishandling accounts - the easy part is becoming educated and abiding by the rules set out.
Jan 9, 2014 10:38PM
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Once again politicians manipulating the tax code to cater to voting blocks.  Why not just a equal tax for every US citizen?  Everyone pays the same amount regardless of income, purchases, retirment planning, number of children, school status, marital status, age, race, religion, contributions to organizations, etc. 

 

Equal amount for every US citizen and adjust government spending to live within the generated revenue.

If the revenue isn't enough cut those things not explicitly called for my the constitution.  If still not enough raise the tax on everyone equally.

Jan 18, 2014 9:12PM
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You're not gonna tax proof a damn thing. You can defer your taxes, but at the end of the day, YOU'RE GONNA PAY. Pay me now, or pay me later... but you're gonna pay.
Jan 10, 2014 12:32PM
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Really there are very few ways that one can game the 401k or the Roth IRA, the government is the winner on both accounts and the worker the loser....the tax system gets you over the long haul when the tax man cometh!
Jan 23, 2014 3:46PM
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When times get tough, your govt will raid this just as it has your Soc Sec and Medicare. Only a matter of time.
Jan 23, 2014 2:02PM
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I agree 100% with somebody else here, to ABOLISH the IRS, period. We must remember the mantra "tax without representation", today probably we will be better under the Crown that under the tyranny of Washington. British enjoy an excellent health care system. We are an over taxed nation, sadly to empower a monster dedicated to foreign wars, without benefit for the majority.

Retirement should not be taxed, we pay already in our labor days taxes to the monster. A flat rate of 10% will be enough for those working.

Jan 18, 2014 8:26PM
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Death and taxes two things that there are no ways for you to beat, you may prolong either or both but the time comes to "pay up". 
Jan 18, 2014 2:42PM
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Taking out of a 401K can result in having you SS benefits taxed also.  Remember that the only things that are guaranteed are death and taxes. 
Jan 23, 2014 2:06PM
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Actually, if one were to interpret the income tax laws, you would come to the conclusion there is no tax on your labor.

The Federal government has and continues to perpetrate this fraud on all of us since 1913. When it comes to the US government ,the word fraudulent would be an accurate description .

Jan 18, 2014 9:35PM
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401(k)'s and IRA's that defer taxation until you reach 70 1/2 (at which time RMD requirements force you to sell them and  pay tax on 100% of the revenues) sounded pretty good at the time.you made the tax-free investment. However, two problems arise:

      1) Up to 80% of your social security benefits will be taxed at your highest marginal rate (after taking your taxable RMD revenues into consideration as well as any other income.).

      2) No one anticipated the huge Budget Deficits and insane growth in the National  Debt which will no doubt result in substantial increases in tax rates.

 

The federal government says: "Pay me now or pay me later." Run the numbers for your own particular situation, and consider investments in Roth's.

Jan 9, 2014 9:03PM
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First you have to have a job,it not easy to get one until then you just have to learn how to stay above water. BYE
Jan 10, 2014 12:59PM
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Wow the was extremely lame. The only way to avoid taxes is to work for the government because then all you are doing is paying yourself.
Jan 10, 2014 12:01PM
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joking! A catch up contribution of $5,500??? Really? Who can do this?
Jan 23, 2014 3:49PM
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Funny, to listen to people so blind.  If you think your IRA or 401k is going to be there for you when you retire, you aren't paying attention.  The grand imperial federal government will begin raiding your pensions and retirement plans very soon. Think I'm crazy?  Just look around at how our governments, at every level, are grossly outspending our country's income.  Where do you think all the money is going to come from to pay the debt and fund future spending???  We're already numerous trillions in the red.  One source will be YOUR retirement funds.  Still think I'm crazy?  Just google "government raiding 401k" or similar.  It IS coming. And with a government, from both sides of the aisle, who view all income and assets as their's, and only allow you to keep what they think you need, WHY WOULDN'T THEY COME AFTER YOUR RETIREMENT PLAN??  They will start by "taxing" your retirement plan assets.  The softer, gentler approach that will fool enough people and quell any rebellion.  Later, outright confiscation will ensue.


Yeah, laugh at me now.  Remember where you heard it when it happens.

Jan 23, 2014 2:08PM
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Invest in 401ks and IRAs at your peril.  Obama and the Socialists have won and will increase taxes massively in the future.  Your 401k and IRA will be taxed at 70 or 80%, vs your 15% to 30% tax break today.  If they don't just nationalize your accouts outright.
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