What are the best retirement accounts for tax savings?
An example of an AI chatbot conversation about retirement accounts that save on taxes.
What are the best retirement accounts for tax savings?
The best retirement accounts for tax savings include 401(k)s, IRAs, and Roth IRAs. Each has unique tax benefits.
Can you explain how a 401(k) works for tax savings?
Sure! Contributions to a 401(k) are made pre-tax, reducing your taxable income. Taxes are paid upon withdrawal.
What about Roth IRAs? How do they differ?
Roth IRAs are funded with after-tax dollars, meaning withdrawals in retirement are tax-free. It's great for tax-free growth!
Are there contribution limits I should be aware of?
Yes, for 2023, the contribution limit for 401(k)s is $22,500, and for IRAs, it's $6,500. Catch-up contributions apply if you're over 50.
What should I consider when choosing between these accounts?
Consider your current tax rate, expected retirement tax rate, and whether you prefer tax savings now or later.
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