Education
The Power Of Tax Deferral
Let's face it - you work hard for your money and that is why it is important for your money to work hard for you. Of course, income taxes are a fact of life - and they are not something we have a great deal of control over. There are ways to accumulate money without having to initially pay tax on it - at least not until you want to use it. This is called Tax Deferral and several types of insurance and financial products offer it.
With tax-deferred products, you do not pay taxes on accumulated funds, interest, or dividends until you withdraw the money. Also, assuming that you will not withdraw the money until later in life, you could be in a lower tax bracket, minimizing the rate at which you are taxed. Tax Deferral may provide you with a powerful financial edge when you are looking to accumulate funds over the long term. 1
Tax-deferred strategies work best for long-term goals like retirement funding. The idea is to leave the money where it is for a long time - to let it go and let it grow. Some examples of the types of investment vehicles that accumulate tax-deferred include insurance and annuity products, 401(k) plans offered by an employer and Individual Retirement Accounts (IRAs).
1 - Withdrawals prior to age 59 - may be subject to an additional 10% penalty tax. Contact your tax advisor for more information.
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