We all know what taxes are. If you work in any industry, and receive a pay check, then no doubt you pay taxes. There are many types of taxes—taxes on clothing, taxes on your home and, of course, taxes on your wages. But did you know that tax planning can actually make your life much easier? It’s true; the sooner you begin making tax planning strategies; the sooner you can stop dreading the time when the tax season rolls around each year.

Your 401k and You

The interest that you pay on your loan defers to your 401k. Most people do not know this. The reason they don’t is because most people do not fully and truly understand 401k strategies. If you are one of these people, and you have difficulty managing your own finances (which is nothing to be ashamed of), then it is imperative that you talk to a financial consultant, as you may be missing out on a ton of great 401k rollover opportunities.

Roth IRA

Roth IRA accounts (Individual Retirement Arrangement) are special types of retirement plans under US law that are generally not taxed, provided certain conditions are met. United States tax laws allow a tax reduction on a limited amount of saving for retirement. The Roth IRA’s principal difference from most other tax advantaged retirement plans is that, rather than granting a tax break for money placed into the plan, the tax break is granted on the money withdrawn from the plan during retirement.

The biggest advantage of a Roth IRA’s is the tax structure and the flexibility that this tax structure offers. There are fewer limitations on the investments that can be made in the plan than many other tax plans, and this adds to the appeal, though the investment options available depend on the institution where the account is created.

In contrast to a traditional IRA, contributions to a Roth IRA are not tax-deductible. Withdrawals are tax-free overall, but not always and not without certain conditions (i.e., tax free for principal withdrawals and the owner’s age must be at least 59½ for tax free withdrawals on the growth portion above principal). One advantage of the Roth IRA over a traditional IRA is that there are fewer withdrawal restrictions and requirements. Transactions within the account (including capital gains, dividends, and interest) do not incur a current tax liability.