When filing season comes around, people often find out that the decisions they make about retirement savings can also have tax implications.
The most common example in this area is the question of whether to invest in a traditional IRA or a Roth IRA, given the considerable differences that exist between these two options.
With a traditional IRA, a person can contribute $5,000 in a given year tax year, and the amount is deductible. A Roth IRA allows investors to get their tax benefits upon retirement, since their savings can be withdrawn tax-free.
In a recent article in the Cleveland Plain Dealer, financial expert Bill Russo was quoted as saying that traditional IRAs are likely to remain popular in the coming years because of questions confronting investors - such as whether tax rates will be higher when retirement time does come. He also noted that the Bush-era tax cuts will be expiring on December 31, 2010, which will result in higher tax brackets in 2011.
People who are hoping to maximize their retirement planning - as well as the size of their refunds - may do well to consult with a skilled tax preparer who can provide valuable assistance in navigating the complexities of the tax code.
Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.