Cashing In Your IRA/401K?
As of this writing the stock market has made a major recovery from the March 2009 low.
Many people wanted to “get out” of their retirement plans because they had dropped so much in value. That is the wrong reason to get out of your retirement plans early. I have written many times in this blog that IRA / 401K and other qualified plans are “time bombs.” You will end up paying substantially more in taxes when you retire than the amount you saved in taxes while contributing (that is, the extra amount in taxes you pay in retirement is almost 10 times the amount of taxes you saved while contributing).
I am asking you to think outside the box. Although most retirement plans have improved in value by 25-30% over the past few months they are still underwater in value from their highs 18 months ago.
Consider cashing out of these “time bombs” now, pay the tax now, and invest the monies into:
(1) A program that will generate lower capital gains tax in the future. With the massive stimulus package spending EVERYONE will be paying much higher taxes in the future. So to avoid this why not pay your taxes in the future at a lower capital gains tax rate than the higher ordinary income tax rate?
(2) A better approach….cash out of your retirement plans and, pay the tax now. Then invest in a program that will grow tax free, you can have access to the money tax free even before age 59 ½ without any tax or penalties, and when you die, the money transfers tax free.
Folks this is a layup with a ladder. Need some more direction on this? Email us at Darlyn@fgmci.com or call (713) 871-5919. By all means subscribe to our new blog www.WealthyFutureblog.com to learn more about this topic and other wealth building programs.