Taxes and Your Retirement Plan
"In this world nothing is
certain except death and taxes.” -Benjamin Franklin
When it comes
to taxes, however, at least you can alter the timing a bit!
If you are working in your career and believe
that you will be paying a lower tax rate after you retire, it makes sense to
delay taxes as much as you can. Participating in your employer’s 401(k) plan
can be a great way to delay taxes. So can making a traditional IRA contribution
or opening an annuity.
DELAY TAXES:
• 401(k)
• Traditional
IRA
• Annuity
AVOID FUTURE TAX INCREASES:
• Roth
401(k)
• Roth
IRA
• Life
Insurance
On the other hand, if you see today’s
government budget deficits and believe you will be paying a higher tax rate in
the future, you should consider participating in your employer’s Roth 401(k)
plan and converting your traditional IRAs to Roth IRAs.
Since January
1, 2010, anyone – regardless of income – has been eligible to do a Roth IRA
conversion.
Such a conversion is basically a decision to
pay taxes now to avoid paying potentially higher taxes later. Once your money
is in a Roth IRA, you have the opportunity for it to grow completely free of
any future income taxes.
What if you are retired, above age 70½, and
don’t really like that you are forced to take required minimum distributions
from your IRAs? If you plan to use your IRA to benefit your heirs, that may be
best accomplished by using those unwanted distributions to buy life insurance.
Since life insurance is paid free of income taxes, the life insurance would
most likely provide a much higher after-tax payment to your children and
grandchildren.
CornerStone Financial
Whether your
nest-egg is worth millions or thousands,
You and your
family deserve it more than the government....
We are here to help you with all of your
financial and insurance needs. Our skilled professionals are licensed with
over 100 top name companies and can help you gain a better understanding of the
concepts behind insurance including investing, retirement and estate
planning. There are literally thousands of products to choose from,
but we can help pinpoint what is best for you and your situation. Please
do not hesitate to contact us if you have questions.
Contact:
Eric Tuttobene
President/CEO
CornerStone
Financial
(615) 427-8780
IMPORTANT DISCLOSURES
The
information presented here is not specific to any individual's personal
circumstances.
To the extent
that this material concerns tax matters, it is not intended or written to be
used, and cannot be used, by a taxpayer for the purpose of avoiding penalties
that may be imposed by law. Each taxpayer should seek independent advice from a
tax professional based on his or her individual circumstances.
These
materials are provided for general information and educational purposes based
upon publicly available information from sources believed to be reliable—we
cannot assure the accuracy or completeness of these materials. The information
in these materials may change at any time and without notice.
