ilmscore | Prediction Details
"The second thing that you can do is maximize tax deferred accounts. This might be something like a 401k or an IRA or a SEP IRA or a HSA. 401ks along with 403bs and IRAs are tax deferred retirement accounts, meaning they are investment accounts that you can put your money into where you can kind of grow your money tax-free. Now, there are some rules and restrictions with this. The whole idea being if you use a traditional 401k or a traditional IRA, you can invest your money into these accounts tax-free, meaning when you put your money in, you don't have to pay taxes on the income. So if you take $5,000 from your income and you put this money into your traditional 401k or your traditional IRA, you don't have to pay any taxes on that $5,000 today. That $5,000 can then grow over the course of your career, and then when you're ready to retire and you pull your money out, that's when you'll pay taxes on a traditional 401k or a traditional IRA. Now, if you use a Roth 401k or a Roth IRA, now you're going to pay taxes when you put your money in. So if you take that $5,000 and you put it into your Roth IRA or a Roth 401k, you're going to pay taxes on the $5,000 today, and then you'll have the after-tax dollars actually being invested, but now your money can grow tax-free, and then when you pull your money out, you can generally pull your money out tax-free as well."
By Minority Mindset | November 12, 2023 | Pending
From video
How The Wealthy Pay No Taxes (And How You Can Too) | Jaspreet Singh 00:46:28 - 00:47:40
Interpreted Prediction
Traditional 401(k)s and IRAs offer tax-deferred growth, meaning contributions reduce current taxable income, and taxes are paid upon withdrawal in retirement. Roth 401(k)s and IRAs involve paying taxes on contributions upfront, but allow for tax-free growth and withdrawals in retirement.

Prediction Details

Topic
Tax Benefits of Tax-Deferred Accounts (401k, IRA)

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