"It's mine, all mine!" cartoon character Daffy Duck wails, spit flying and lisp in full effect as he stuffs Bugs Bunny down a rabbit hole in hopes of keeping the pile of treasure all to himself.
For baby boomers, there's a lesson to be learned from the wacky duck of their youth — think of the pile of gold coins as your Individual Retirement Account.
Traditional IRAs are funded with pre-tax dollars, which can help lower your taxable income, and contributions also grow tax free.
But Uncle Sam still gets his piece of the pie — and that happens when you begin taking money out, usually in retirement or at least at age 59½ to avoid early withdrawal penalties. Taking a page from our friend Daffy, that means the money in your IRA isn't all yours.
For this reason, financial advisors suggest clients also consider a Roth IRA, which is funded with post-tax dollars. The contributions also grow tax-free, but unlike a traditional IRA, withdrawals are not taxed.
"Say you're at that 24 to 25 percent tax bracket, all those dollars belong to you," said Dan Yu, managing principal of EisnerAmper Wealth Advisors in New York. "Whereas in a [regular] IRA, nearly one-third of that is going to go to the government. Once that is explained appropriately to a client, the light bulb goes off."