When $1 Million in a 401(k) Is Really $600,000
That $1 million in your 401(k) account looks mighty good. It's more than you've ever had in your life, and that money will fund your retirement. But it's not quite yours. Your retirement account is tax-deferred, not tax-free. And Uncle Sam hasn't been paid yet.
"Some people have this notion that when they retire, they don't have to pay taxes," says Nicolas Abrams, president of AJW Financial Partners in Baltimore. "I don't know who started that rumor, but I have to dispel that myth."