By Abigail Soren
Abigail Soren is a Certified Financial Planner™
and Senior Financial Planner at BT Wealth
Management, LLC. She assists clients in managing
and balancing their investments and financial
goals. In her spare time, Abigail volunteers for
the Atlanta Humane Society and enjoys taking
her Pomeranian, Jack, on long walks around the
city. You’ll often find them on a Starbucks patio
enjoying a good book.
I recently sat down with some
girlfriends for dinner. As we sipped
our margaritas, conversation of
adulting and saving came up. A friend
sheepishly said, “I don’t know where to
start saving, so I don’t.” As a financial
planner, my job is to organize people’s
financial lives and create a plan to help
them meet their life goals. I’ve actually
heard this reasoning quite often.
But, what if we change that mindset?
What if we lean into the confusion
revolving around personal finances
and let education empower us to
be in control of our own financial
futures? After all, we’re strong,
Let’s focus on the different types of
accounts in which you can invest your
hard-earned cash. They are generally
defined by how they are taxed.
You can still put the same stocks
and bonds into each of them: The
difference is how those investments
are treated while they are in the
account and when you take them out.
Below is a guide to get you started!
Potentially helps you later
Distributions aren’t taxed
in retirement! Contributing to your 401(k) lowers
your current tax liability. Potentially helps you now Potentially helps you now & later
Use “after-tax” dollars (after
you get your paycheck) to fund. Use “pre-tax” dollars (before
you get your paycheck) to fund. Use “after-tax” dollars (after
you get your paycheck) to fund.
Funds in the account
grow tax-free! Funds in the account
grow tax-free! Funds in the account do not
Annual Max Contribution
Roth 401(k): $18k
Roth IRA: $5.5k Annual Max Contribution
Trad. 401(k): $18k
Trad. IRA: $5.5k
Funds are taxed
when withdrawn to
Roth 401(k)s & Roth IRAs
Traditional 401(k)s &
*Deferred: Taxes are delayed until later time.
REVEAL | Q3 2017
You can use these funds without penalty
now or in retirement.
Dividends and interest produced in the
account are taxed in the year they are received.
When you sell investments,
you get taxed also.