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Strategies |
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Tap The Power Of Tax Deferral
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There are a number of tax-deferred savings vehicles available to you as an
investor, such as IRAs, 401(k)s, 403(b)s, and 529 plans. The chart below will help you understand why these
investments are so important in helping you achieve your financial goals. Through a comparison of two identical
investments of $100,000 over a 20-year period, the difference is substantial. After 20 years of investing you would
have $200,000 more than if you invested in a taxable account. Of course, you will be subject to taxes at the
time of withdrawal from the tax-deferred account.
| The Advantage of Tax Deferral1 |
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| Source: Ned Davis, Inc. |
Next: Maximize Your Contributions To Employer-Sponsored Retirement Plans
1. This example is hypothetical
and for illustrative purposes only and is intended to show the effects
of tax deferral on two investments over 10, 20 and 30 years. It
assumes a 6% annual return and a 33% overall income tax rate. Withdrawals
from the tax deferred account are subject to current income tax
as well as a 10% federal penalty tax and 20% withholding tax if
withdrawn prior to age 59½. The imposition of taxes and penalties
will reduce accumulated amounts. Actual results will vary.
This information is general
in nature and is not intended to constitute tax advice. Please consult
your tax advisor for more detailed information on tax issues and
for advice on your specific situation.
Investors should consider the investment objectives, risks, charges, and expenses of a fund carefully before investing. Download a prospectus that contains this and other information about a fund, and read it carefully before investing.
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