You Don't Have to Pay Taxes on Tax-Deferred IRA, 401(k) etc Income
7 Reasons to Invest for Income -- Reason #3
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Tax-deferred accounts such as the traditional IRA, 401(k), Keogh accounts, 403(b) and the federal employee Thrift Plan allow you to receive income from your investments and not pay taxes on it until you withdraw it at age 59 1/2 through 72.
With a Roth IRA you don't have to pay taxes on the income you receive within the account even if you withdraw it. And unlike the other types of accounts, you don't ever have to withdraw it -- you can leave it to your heirs.
Tax Deferred Allow You to Reinvest and Compound Your Investment Income Without Paying Taxes for Many Years
Advocates of growth stock investing may say, big deal, if I buy the next Microsoft (or Wal-Mart, Intel, Dell etc) and sell it within my IRA, I don't have to pay taxes on the capital gains.
That is true. However, if you sell stocks, you must then find the NEXT Microsoft (or Wal-Mart, Intel, Dell etc) to invest your money in. You may not be so smart (or lucky) again.
The income investor keeps their investments and just keeps on collecting money for it.
Next: Reason #4 -- Protection Against Accounting and Other Fraud
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