Liz Weston: Will you face a tax bomb in retirement?
Good savers who take full advantage of their 401(k) plans and other tax-deductible retirement plans could be setting themselves up for unnecessarily high tax bills in retirement
Good savers, beware. The money you’re stuffing into your 401(k) and other retirement accounts has to be withdrawn someday. If you’re not strategic about how you save, you could face unnecessarily high tax bills and inflated Medicare premiums in retirement — plus, you could be saddling your heirs with higher taxes.
The earlier you start defusing this potential tax bomb, the better. But even people in their 60s or early 70s may have opportunities to lessen the potential damage — as long as they act swiftly.
“You do not want to be in the position as some clients are that all of their funds are inside of a tax-deferred account,” says Pam Ladd, senior manager of personal financial planning at the Association of International Certified Professional Accountants.
TAX BREAKS NOW COULD CAUSE TAX PAIN LATER
