Quarterly Tax Tip: Tax-Free Growth AND Tax-Free Withdrawals Anyone?
August 30, 2018

August 30, 2018


This note is a reminder to those clients who file estimated tax payments…

Your estimated tax payments for the third quarter of 2018 are due no later than Saturday, September 15th!!

Have a great Labor Day weekend and enjoy the rest of the summer!

Hudock Capital Group, LLC

Quarterly Tax Tip: Tax-Free Growth AND Tax-Free Withdrawals Anyone?

Saving for retirement using a Roth IRA can provide some great benefits for those who qualify. One of the greatest benefits is tax-free growth AND withdrawals. Unlike a traditional tax deferred plan which defers the inevitable taxation of the assets when funds are withdrawn, Roth accounts grow tax free and funds can be distributed during retirement without owing taxes. There is also no forced distribution (required minimum distribution) at age 70 ½ like traditional IRAs, so assets in a Roth account can continue to grow tax free through your lifetime. Many employer sponsored plans such as a 401(k), 403(b) and 457(b) now allow employees to pick between pre-tax account or Roth account as contribution options. Consult your payroll administrator or human resource department to see if your plan has this option.

A Roth IRA can be a very useful tool for an investor who is currently in a low-tax bracket but expects taxes to be higher in retirement. A Roth IRA can be used as a loophole for those who may not qualify to make a deductible traditional IRA contribution. In addition, Roth IRA contributions can be made long after you turn age 70 ½, unlike traditional IRAs.

The ability to participate in a Roth plan phases out for certain high-income earners. Even if your income level is too high to contribute to a Roth IRA or make a deductible IRA contribution, there is a strategy referred to as a backdoor Roth contribution that may make sense based upon your situation. We can have a discussion with you and your tax preparer to see if this strategy would work for you. Please call us to learn more.


Hudock Capital Group does not render tax or legal advice, but we will be pleased to work with professionals you may employ in these areas. Be sure to consult with your own tax and legal advisors before taking any action that may have tax consequences.

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