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Ten Things you MUST know about Qualified Plans [401(k), 403(b), IRA, etc.]:

March 05, 2019

Whatever information was given when you signed on, it is not likely you received these explanations:

  • Your partner is Uncle Sam and he makes the rules. Those rules can change at the stroke of a pen.
  • You do NOT get a tax deduction when contributions are made. You receive an income reduction and defer the tax liability.
  • You or your heirs will pay taxes on the money at a future date.
  • The tax rate you owe is unknown. It will be computed when the money is withdrawn.
  • Your tax obligation grows as your account increases.
  • You could pay more taxes than planned if your future tax bracket is higher when you withdraw than when you postponed the tax.
  • Your money is not easily accessible.
  • A company match is a good thing, as it will help pay your taxes when you decide to withdraw your funds.
  • Your statements do not show the tax liability due on your account.  
  • Uncle Sam requires you take minimum distributions of your funds after age 70 whether you wish it or not.  Penalties for noncompliance are severe – 50% forfeiture.

At his trial, Socrates said, “The unexamined life is not worth living.”  Our approach is not so new.  Schedule a review if only to be assured you are doing all you can.

If what you know to be true about your finances turned out NOT to be true, how soon would you want to know?