What are some pre-tax investments i could invest in?

Question

Uncle Sam is taking too much money out of my check

Answer 1

Do you have a 401K at work? If so, most people will fully fund that before anything else. If you are self-employed, you can set aside up to 25% or 40K a year in certain plans, all pre-tax.

Another option for the self-employed, and those with employers that offer them is the HSA or MSA health insurance plans. With these types of plans, you have high deductible medical insurance and you can put aside, pre-tax money up to the maximum of your deductible each year. Any money that is used for medical expenses, comes out without any taxes due (so you are essentially paying for your uncovered stuff with pre-tax money and this includes a lot of things regular insurance doesn't pay too). Anything you don't use remains in the account for future years or as added retirement savings (taxed when you withdraw like an IRA).

You can also fund a traditional IRA up to $3500 a year pre-tax.

The next best thing are tax-deferred or sheltered investments. This includes things like muni-bonds, Roth IRA accounts and Permanent life insurance. Variable life can be a great way to sock away extra savings, and it is possible down the road for you to get to the cash value and never pay taxes on it.

Most people will need life insurance, so this type of plan covers both a basic permanent insurance need and the ability to sock away a lot of extra cash on a tax favored basis.

Anyhow, VL is great for those who can really use it, but isn't right for every investor. It's one product you should be fully informed on before you buy.

Sit down with a good financial planner (not a broker, a planner) and figure out what works for you.

Answer 2

Its a remember of pay me now or pay me latter. no longer fairly to a lot of a large difference. Paying the tax now lets your efficient factors develop tax loose and once you're taking the money accessible is not any tax deduction. Paying the tax latter promises a extra perfect possibility to make investments extra now. maximum monetary advisers will say the Roth IRA is the added perfect deal.