YOUR TAX TIME­LINE

Inc. (USA) - - BUILD -

Di­vide up your re­tire­ment sav­ings into these three types of ac­counts.

PAY NOW

Tax­able ac­counts are sim­ple sav­ings and bro­ker­age ac­counts, which re­port any in­come you’ve re­ceived over the course of the year to tax au­thor­i­ties. You pay tax on div­i­dend and cap­i­tal gains in­come in the year that you re­ceive it.

PAY LATER

Tax-de­ferred ac­counts are those set up within a qual­i­fied re­tire­ment plan, in­clud­ing 401(k) and 403(b) plans, as well as tra­di­tional and SEP-IRAs. Con­tri­bu­tions to these ac­counts are tax-de­ductible when they are made, and no tax is due on ac­crued earn­ings in an ac­count un­til the money is with­drawn at re­tire­ment.

PAY NEVER

Tax-free ac­counts are Roth IRAs and Roth 401(k)s, which do not al­low you to claim de­duc­tions for your con­tri­bu­tions. But when the money is used for re­tire­ment, with­drawals are gen­er­ally ex­empt from tax.

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