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Why Pre Tax Planning Outperforms Roth for Owners
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Subscribe24 MAR 2026 / EXPERT INSIGHTS
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A profitable business owner debates whether to deposit more retirement money into Roth accounts (taxed now but not upon withdrawal) or pre-tax contributions (reduce taxable income today and are taxed later), with most evidence suggesting the latter as a more beneficial choice. Using pre-tax contributions provides tax rate arbitrage, lifetime income smoothing and strategic use of the tax code during peak earning years, while also avoiding potential future increases in tax rates due to rising national debt, making pre-tax plans a powerful weapon for tax and wealth building for high earning business owners.
A profitable business owner sits down with their CPA late in the year. Revenue is strong, taxable income is higher than expected, and the question quickly arises: should more retirement money go into Roth accounts or traditional pre tax plans? In simple t...
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