How to Grow Your Retirement Fund without Growing Your Taxes

Preparing for your retirement is the responsible thing to do. You will need to make sure that you have plenty of income available when you are done working. Retirees will also need to make sure that their retirement is not taxed too heavily once it comes time to withdraw the money. Here are some tips for raising retirement accounts, but not raising your tax debt.InvestingFuturePic

Invest in a Roth IRA

Roth IRA accounts are the best for those who wish to avoid tax on investment and avoid tax after retirement. Any money that you put into the Roth IRA will not be taxed, since you will use after-tax income. With a Roth, your accounts will be free and clear from taxes during the withdrawal period, too.

Annuities

If you invest in annuities for your retirement, the amount that pays out from the principle of your annuity purchase will not be taxed. Interest will be able to be taxed, but if your annuity amount is modest, this will not lead to a major increase in the taxes that you owe after retirement.

Mutual Funds and Real Estate Investments

If you own small properties and investments such as mutual funds on a long-term basis, your tax rate is likely to be 15% or under. With a mixture of Roth accounts, annuities, and investment portfolios with mutual funds and real estate, you can comfortably retire without increasing your taxes much more than you are used to. Using after-tax income to make retirement purchases can benefit you on this year’s taxes and in the long run.

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johnAbout john
Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. He is a graduate of Washington State University and the University of Washington School of Law.

Huddleston Tax CPAs of Seattle & Bellevue
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Huddleston Tax CPAs & accountants provide tax preparation, tax planning, business coaching, Quickbooks consulting, bookkeeping, payroll and business valuation services for small business. We serve Seattle, Bellevue, Redmond, Tacoma, Everett, Kent, Kirkland, Bothell, Lynnwood, Mill Creek, Shoreline, Kenmore, Lake Forest Park, Mountlake Terrace, Renton, Tukwila, Federal Way, Burien, Seatac, Mercer Island, West Seattle, Auburn, Snohomish and Mukilteo. We have a few meeting locations. Call to meet John Huddleston, J.D., LL.M., CPA, Tawni Berg, CPA, Jennifer Zhou, CPA, Jessica Chisholm, CPA or Chuck McClure, CPA. Member WSCPA.