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I have said this before, but I want to make sure all are aware: There is no Tax Savings when you invest in a 401K, IRA, Sep Simple, or another qualified plan.
Taxes are deferred & there is no guarantee they will be less in the future when you take money out of the plan.

First of all, when you fund a qualified plan, you’re relinquishing control of cash and you’re putting it into a financial tool where you are choosing not to pay the tax on now, but you will pay it at a later date.

You’re taking pretax dollars, you’re saving them in an account where most of the time your cash is allocating in the stock market.

There may be some self-directed IRAs where you’re allocating in real estate or some other investment areas, but I bet over 90% of you, maybe even as high as 95%, from what I’ve seen, have money in qualified plans: 401(K)s, IRAs, SEPs, Simples where you’re relinquishing control of that cash and it’s in the stock market.

As you know, I am NOT a tax planner so I advise you check all of this with your CPA (I am happy to refer you to someone if you do not have anyone or want someone new) but I want you to know you are the one taking all the risks and it only benefits the IRS

  1. You’ll owe income tax on your contributions AND on your gains. So if you have a bigger income when you retire than when you made contributions, you’ll be in a higher tax bracket and owe more than if you hadn’t deferred your taxes.
  2. Your plan likely has hidden fees or broker fees
  3. You cannot access your money without fees or penalties
  4. Taxes and laws change – we are seeing it happen in real time right now
  5. 401k have mandatory distributions at age 72, even if you are still working

Watch this 20-minute video I did a while ago explaining how “savings” with 401k’s, IRAs, and other qualified plans are just a myth – let me show you the facts.