When people begin to plan for retirement, they frequently concentrate on one primary goal: saving enough money to retire comfortably when the time comes.
Unfortunately, that’s often where the planning ends, which means some crucial details may be overlooked, such as:
• Determining how to turn those accumulated assets into a steady income stream to support the desired lifestyle.
• Investigating tax techniques you can adopt to keep and pass on retirement savings to your heirs.
Creating a strategy that distributes your assets in the most tax-efficient manner possible can assist you in achieving your retirement and long-term objectives, but it’s not an easy undertaking. And if you wait too long, you may miss out on some of the Tax Cuts and Jobs Act of 2017’s significant tax savings, as many of its provisions are set to expire at the end of 2025.
Here are three tax strategies to improve your retirement strategy in the future:
Convert Traditional IRA to Roth IRA
Are you worried about future tax rates, particularly when RMDs kick in at age 72 (75 soon)? Converting a traditional IRA to a Roth IRA could help you and your heirs save money on taxes in the future. Consider the following scenario:
Our office currently assists a client who wishes to withdraw approximately $60,000 per year from an IRA when she turns 72. That, along with her other sources of income, is all she expects to require. However, based on what she currently has in her account and a projected 6% growth rate, the amount the government requires her to withdraw could be closer to $90,000â€”or even more.
Fortunately, according to the Tax Cuts and Jobs Act, she can convert her traditional IRA to a Roth convert at a 3% lower tax rate until the end of 2025. She’ll have to pay taxes on the money as she moves it, but her savings can grow tax-free after being safely deposited in that Roth account.
Giving to Charity to Reduce Taxable Income
A CRUT is an estate-planning mechanism that pays a named beneficiary income. After the beneficiary passes away, the trust’s remaining assets are distributed to a charitable organization of their choosing.
Using NUA Distribution to Make the Most of Company Stock
If you’re concerned about the tax burden you’ll face in retirement, you might consider putting up a net unrealized appreciation (NUA) payout.
Employees with corporate stock in a 401(k) can roll those shares over to a brokerage account and pay tax only on the stock’s cost basis at the time of distribution under the NUA rules. The account holder will pay taxes at more favorable long-term capital gains rates than ordinary income tax rates when those shares are sold.
After entering the financial services industry in 1994, it was a desire to guide people towards their financial independence that drove Aaron to start Steele Capital Management in 2013. Armed with an extensive background in financial planning and commercial banking coupled with a sincere passion for helping people, Aaron has the expertise and affinity for serving the unique needs of those in transition. Clients benefit from his objective financial solutions and education aligned solely with
helping them pursue the most comfortable financial life possible.
Born in Olympia, Washington, Aaron spent much of his childhood in Denver, Colorado. An area outside of Phoenix, Arizona, known as the East Valley, occupies a special place in Aaron’s heart. It is where he graduated from Arizona State University with a Bachelor of Science degree in Business Administration, started a family, and advanced his professional career.
Having now returned to his hometown of Olympia, and with the days of coaching his sons football and baseball teams behind him, he now has time to pursue his civic passions. Aaron is proud to serve on the Board of Regents Leadership for Thurston County as the Secretary and Treasurer for the Morningside area. His past affiliations include the West Olympia Rotary and has served on various committees for organizations throughout his community.
Aaron and his beautiful wife, Holly, a Registered Nurse, consider their greatest accomplishment having raised Thomas and Tate, their two intelligent and motivated sons. Their oldest son Tate is following in his father’s entrepreneurial footsteps and currently attends the Carson College of Business at Washington State University. Their beloved youngest son, Thomas, is a student at Olympia High School.
Focused on helping veterans and their families navigate the maze of long-term care solutions, Aaron specializes in customized strategies to avoid the financial crisis that care related expenses can create. Experience has shown him that many seniors are not prepared for the economic transition that takes place as they reach an advanced age.
With support from the American Academy of Benefit Planners – an organization with expertise and resources on the intricacies of government benefits – he helps clients close the gap between the cost of care and their income while protecting their assets from depletion.
Aaron can help you and your family to create, preserve and protect your legacy.
That’s making a difference.
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