Let’s assume two people
have $5,000 to invest every year for thirty (30) years. One person invests in a tax-free account
such as a Roth 401(k) that earns 6% a year.
The other person invests in a taxable account which also earns 6%
annually.
Let’s also assume both are
in a combined 28% tax bracket. The
tax-free account would be worth $395,291 while the taxable account would be
worth $295,395. That’s a difference of
$99,395!
Tax-deferral does make a
difference. Don’t have $5,000 to invest
or a thirty-year time frame? Not to
worry. Whatever the dollar amount or
time frame, tax-deferral can work for you.
Business owners are
constantly being hit by a barrage of taxes, federal, state and local. Here is an excellent way to help your liquid positions
cash reserves for your business.