Three Types of Taxation - Old Peak Finance

Three Types of Taxation

May 25, 2017

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Three Types of Taxation

May 25, 2017

Modify your thinking from the type of account to type of taxation. Every account you have can fall into 3 types of taxation: taxable, tax-deferred, or tax-free.

Taxable

  • Individual bank & brokerage accounts
  • Joint bank & brokerage accounts
  • Trust bank & brokerage accounts

Tax Deferred

  • Traditional IRAs
    • Deducted annual contributions
    • Earnings
    • Rolled over employer plans (401(k), etc.)
  • Pretax balance of employer plans
    • 401(k)
    • 457
    • 403(b)
    • SEP
    • SIMPLE
    • All company contributions
      • Match
      • Profit sharing

Tax Free

  • Roth IRAs
    • All contributions and conversions to Roth IRA (any new money on which you have already paid tax)
    • Earnings within Roth IRA after the end of a five-year waiting period from first contribution (or at least age 59½, become disabled, or die)
  • After-tax balance of employer plans
    • After-tax employee contributions to 401(k), 403(b), or 457
    • Roth employee contributions to 401(k), 403(b), or 457
    • Earnings on Roth contributions to 401(k), 403(b), or 457 after the end of a five-year waiting period from first contribution (or at least age 59½, become disabled, or die)
This article is not intended to provide tax, legal, accounting, financial, or professional advice. Readers should seek advice from qualified professionals who can review their specific circumstances. Old Peak Finance endeavors to provide information that is accurate and current. However, we cannot guarantee that this information has not been outdated or otherwise rendered incorrect by new research, legislation, or other changes. Old Peak Finance has no liability or responsibility to any individual or entity with respect to losses or damages caused or alleged to be caused, directly or indirectly, by the information contained on this website.

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