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MAKING APRIL 15TH YOUR FAVORITE DAY

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ADVANTAGED PLANS

It used to be that limited partnerships were the best tax shelter. Thou- sands of investors sunk billions of dollars into these equities, seeking tax breaks. However, they sacrificed their rate of return for tax sav- ings. Now, there are fewer tax shelters that exist, and fewer people using them to their advantage! Hopefully, after reading this, you won’t be one of them.

IRAs These accounts are most commonly used to accumulate wealth for many reasons. First, they allow you to grow your money at a tax- deferred rate. Second, you don’t have to begin taking money out of the account until you reach 701/2 years of age. Third, you can deposit up to $3000 per year before tax. (You deduct the amount you con- tribute from your taxes.) Although $3000 doesn’t sound like a great deal of money, over time it does accumulate. Plus, the more money you contribute each year, the faster it will grow.

Roth IRAs The main difference between IRAs and Roth IRAs is that the Roth contribution isn’t tax-deductible. However, it’s a great way to shelter your money and let it grow tax-deferred. The Roth is also subject to the same maximum contribution limits as the traditional IRA, but when you begin to take the money out, it will be distributed tax free. So, while contributing to a Roth won’t save you money on your tax bill currently, it could save you, potentially, a large amount of money during your retirement.

401(k), 403(b), and 457 Accounts Most people are familiar with these types of retirement accounts that are offered by employers, typically large companies, and tax-exempt organizations, such as most nonprofit organizations, hospitals, and schools. The beauty to these accounts is that they help lower your current taxable income. When you invest in a 401(k), 403(b), or 457, the money comes out of your paycheck before the tax is taken out.

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