Total Financial Solutions President/CEO Arif Halaby is talking about the benefits of a Roth IRA or Roth 401(k) versus more traditional retirement accounts.

While a traditional IRA or 401(k) is typically a pre-tax account, meaning that you get a tax break on the funds now but have to pay later, a Roth IRA or Roth 401(k) is what’s called a post-tax account.

“(It’s) post-tax money — in other words, money that’s already been taxed,” explained Halaby, a Certified Estate Planner. “You’re allowed to pull that money out, any interest that it earns, and never pay tax again, so that changes a lot of the formula. That actually puts you in a place (in retirement) to where you could earn, live on this much money way up here, but you’re paying taxes way down here.”

Related: Total Financial Solutions: How Much Money Do You Need To Retire?

One major potential benefit of paying taxes on retirement funds now rather than later is that taxes are likely to increase over time and remain a mystery for the future, where the current tax rate is a known fact, according to Halaby.

In addition, most people saving for retirement have a number of tax write offs and deductions available now that they won’t have after they retire, including dependant children, business expenses and home mortgage interest.

This means that the impact of paying taxes on their retirement funds will likely be less significant today than after they retire, according to Halaby.

“Those benefits, those write offs, you only have today,” Halaby said. “That goes away when you’re retired… I want you to consider, folks, no longer doing your company traditional 401(k) and instead consider the Roth 401(k).”

Because the current tax rate is at a historic low, Halaby believes now is the time to meet with your CPA or tax advisor to determine if a Roth account is right for you.

“In my opinion, this is the time to meet with him,” he said. “You sit down, you lay it out, you say, ‘Okay, we’re halfway through the year, here is where we are.’ And by meeting with your tax professional, they will give you ideas, conversations.”

Halaby and his team at Total Financial Solutions often partner with their clients’ tax professionals — in addition to stock brokers, insurance professionals, elder law attorneys, etc. — in order to ensure the client is set up for success.

“Whoever it is that you’re working with, it’s very important (that) all three, four should be talking to each other,” Halaby said. “If you would like help, we are here for you.”

Total Financial Solutions prides itself in helping its clients design a higher income strategy, protect their principal and lock in their gains, all while securing reliable income for retirement.

For a free consultation, contact them by calling 888-99-RETIRE or by visiting their website www.TFSwealth.com.

Total Financial Solutions offers assistance with preparing for retirement in Santa Clarita and the surrounding valleys. Santa Clarita financial professional Arif Halaby, a Certified Estate Planner, and Total Financial Solutions staff work with people of all ages, helping them protect, grow and preserve their assets through an individualized approach. As a well-known financial professional, Arif Halaby is also the host of “Total Financial Solutions Safer Money Hour” on KHTS AM-1220. Launched in 2004, the show offers listeners retirement planning tips and guidance for dealing with today’s ever-changing financial needs.  

Total Financial Solutions, Inc.

24322 Main Street

Newhall, CA 91321

661-753-9683

800-990-7344

Total Financial Solutions – Newhall

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Arif Halaby, Total Financial Solutions, Financial Planning, Planning for Retirement, Retirement Planning