Sheltering Your Taxes
Retirement vehicles such as IRAs, 401(k), 403(b), and pension plans are all examples of perfectly legal tax shelters. By setting aside money for retirement, you can defer paying taxes on that money until you retire – when, presumably, you will have a lower overall income and be subject to a lower tax rate.

Shelter or no shelter, you will most probably have to pay some taxes on your retirement funds. It's a little like parking a vintage automobile in a garage. As long as the car stays in the garage, it is, quite literally, sheltered. If and when you choose to drive the car, it moves outside of the shelter, and you will have to pay for gasoline, maintenance, and the like. In essence, then, while you may be able to shelter some of your assets from taxes for many years, sooner or later, you will lose the shelter.

Retirement programs make excellent tax shelters because:

• Contributions to the program may help reduce current taxable income.
• There are currently no federal income taxes on contributions until withdrawn.
• Future distributions may be eligible for favorable tax treatment.
• Contributions grow tax-deferred.

And, in addition to the tax advantages, don't forget the fundamental reason to save for retirement: building financial security.

Note: The above information is not intended or written to be used as legal or tax advice. It was written solely to support the sale of annuity products. As a taxpayer, you cannot use it for the purposes of avoiding penalties that may be imposed under the tax laws. You should seek advice on legal or tax questions based on your particular circumstances from an independent attorney or tax advisor.

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