You may have saved money for retirement in a traditional IRA. You may have saved money in an employer sponsored plan such as a 401(k), 403(b), or 457 plan, some other retirement account that defers taxes, or a combination of these.
Over time, you want and expect your retirement savings to grow.
But as your savings in these types of plans grows, so does the tax burden associated with it. That’s because taxes on that money are deferred, not eliminated.
Who pays these taxes? You will, when you take withdrawals, and your heirs will, when they receive the balance that remains at your death. As your balance grows, so do the deferred taxes.
What most people really want is their savings to grow, but the associated tax burden to not grow.
