Five Reasons Tax Shelters Are More Important Than Ever

March 4, 2010 | by The Wall Street Journal

When times are tough, it's too easy to put tax management issues on the back burner. Sheltering your investment profits from taxes may seem like a remote concern when your accounts are a sea of red ink. And you may feel you have more pressing demands on your cash flow. But tax shelters–especially retirement plans such as 401(k)s and Individual Retirement Accounts -- aren't merely as important as they used to be.

They're more important.

Why? Five reasons… read the full article

Comments:

“1. They are sheltered from creditors as well as from taxes.” Bankruptcies are on the rise, especially personal filings. With the unemployment rate around 10% and the unrealized unemployment rate even higher, many people are walking away from their liabilities in the same fashion as many have done with their mortgage. Reuters announced on March 2nd that “Combined business, personal filings jumped 13 percent” according to “bankruptcy data provider on Tuesday”.

“3. Taxes are likely to rise.” There aren’t many people who think that taxes aren’t going to increase. You may say, not me I’m a middle class American, unfortunately I don’t think it matters. If they don’t hit you with the obvious ordinary income tax rate they will impose a backdoor tax somewhere. Our national spending is out of control, they have to pay for it somehow.

”5. Tax shelters are progressive.” Tax sheltered accounts are more valuable to those who earn/withdrawal less in retirement. Brett does a great job illustrating this in the article, but the bottom line is the less money you make in retirement the bigger the advantage you get from a tax sheltered account on a percentage basis.

Tags	investments, IRA, roth-ira, tax-management, tax-sheltered-accounts, tax-shelters
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