• Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint
Share this Page URL
Help

Chapter 4. No Plan Is an Island > How Much Should You Put into Qualified Plans?

How Much Should You Put into Qualified Plans?

Now that we have a solid understanding of the different types of qualified plans that may become available to us, the next question is, how do we decide an amount to put into these plans? The general answer to that question is as much as you possibly can without risking a cash flow shortage for living expenses or emergencies. That is easy to say but difficult to execute. One thing that you clearly do not want to do is invest in a qualified plan and then take the money out prior to your retirement.

Some experts suggest that you shouldn't maximize your tax-deferred contributions, pointing to the difference between income taxed as ordinary gains and income taxed as long-term capital gains. With qualified retirement plans and traditional IRAs, the earnings on your investments are taxed as ordinary income compared with investments in products made on an after-tax basis that are typically taxed at much lower capital gains rates.


PREVIEW

                                                                          

Not a subscriber?

Start A Free Trial


  
  • Creative Edge
  • Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint