Considering that when u have to withdraw from ur retirement account you are taxed. But withdrawing from your savings account u r not taxed.
2007-10-20 10:27:27 · 9 answers · asked by molei 2 in Business & Finance ➔ Investing
With a traditional IRA you don't have to pay income tax for the money funded into it. When you finally retire and start withdrawing funds, you pay a nominal fee, something like 10%.
2007-10-20 12:03:40 · answer #1 · answered by Anonymous · 1⤊ 0⤋
You are taxed every year on the earnings in your regular savings account. The advantage of a retirement account is that you are not taxed UNTIL you withdraw. (With a Roth IRA, you are not taxed even then if you are old enough or under certain other conditions.) Also, the contributions may be tax-deductible (if it is an traditional IRA or you are self-employed) or excluded from W-2 income (if it is a 401K, etc., employer plan).
2007-10-20 11:01:22 · answer #2 · answered by StephenWeinstein 7 · 0⤊ 0⤋
You are taxed either way. The difference is WHEN you are taxed.
For ordinary savings, you must pay taxes on earnings every year as you go. With a deferred-tax retirement plan, such as a 401(k) or conventional IRA, you defer paying taxes on the money you put in and the earnings it makes until you withdraw the funds.
2007-10-20 10:30:59 · answer #3 · answered by Anonymous · 0⤊ 0⤋
You are taxed every year on the interest of a savings account.
Usually when you retire your income is not as high and you have a lower tax bracket.
There is also the Roth IRA as the money goes in to the Roth it is taxed. What ever interest the account makes will not be taxed when it is withdrawn.
2007-10-20 10:31:19 · answer #4 · answered by ♥♥The Queen Has Spoken♥♥ 7 · 0⤊ 0⤋
In a retirement plan, you have some tax advantages, depending on the type it is. In an ordinary savings a/c you have no tax advantages at all.
2007-10-20 10:50:23 · answer #5 · answered by Anonymous · 0⤊ 0⤋
on retirement plan you pay no tax on the interest you make every year ...until you retire
2007-10-20 10:30:01 · answer #6 · answered by Anonymous · 1⤊ 0⤋
I think the advantage lies in interest that your money can accumulate, ask those people that has both savings and from there you can compare
2007-10-20 10:31:21 · answer #7 · answered by LV-n 1 · 0⤊ 0⤋
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2016-10-13 08:41:02 · answer #8 · answered by ? 3 · 0⤊ 0⤋
in a IRA you pay no taxes.
2007-10-20 11:00:37 · answer #9 · answered by Anonymous · 0⤊ 0⤋