Stop stashing it all in your IRA? Not so crazy

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in Small Business Tax,Small Business Tax Deduction Strategies

Conventional wisdom says to salt away as much money as you can in tax-sheltered retirement plans and IRAs. Reason: The contributions grow tax-deferred until you take withdrawals, usually when you’ve retired. But can you have too much of a good thing?

Strategy: Allocate dollars to taxable accounts as you near retirement. Do it even if it means cutting back on retirement plan contributions. That way, you won’t be clobbered on taxes when you withdraw the funds.

The IRS generally taxes distributions from qualified plans and IRAs at ordinary income tax rates reaching up to 35%. So, if you sink all your cash into those accounts, you could face major tax bills in the future.

That doesn’t mean you should ignore tax-favored retirement plans. But it does mean you may want to mix things up a bit.

Pay Uncle Sam now or later

Typically, a highly compensated exec or business owner will fall in a top tax bracket while he or ...(register to read more)

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