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Will I have to pay taxes on the gains generated by my retirement accounts once I am in retirement?

I am 38 years old. I have a 403(b) account as well as an elective deferral which reduces my salary, pre-tax. Will I have to pay taxes on the gains generated by these accounts in retirement?

I'm considering using ordinary dividend income from a mutual fund to start either a traditional or a Roth IRA. If open a traditional IRA in 2018, can I deduct my contribution from my AGI for that tax year? I know I can't deduct the Roth IRA and that I wont pay taxes on the Roth IRA in retirement. For either types of IRAs, will I pay taxes on the growth/gains in retirement?

Career / Compensation, Retirement, IRAs, Mutual Funds, Taxes
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September 2018

Congratulations on saving for retirement and maximizing your contributions.  As for your tax questions, you will not be paying taxes directly on the gains of your investments.  With a ROTH IRA that money is tax free once you reach age 59 and a half.  For an IRA or 403(b) account, once you reach 59 and a half you are taxed at your ordinary income tax rate on withdrawals from the account.  

Additionally, you can deduct your contributions from AGI but the amount you are able to deduct is adjusted based on your income and filing status.  For single taxpayers it is 100% deductible with a MAGI of < $63,000 and partical deduction up to a MAGI of $73,000.  If you are married filing jointly it is a full deduction up to a MAGI of $101,000 and partial deduction of up to a MAGI of $121,000.  




September 2018
September 2018