Retirement Taxes

All during your working career you’ve been accumulating and growing your investments. Your tax strategies now and then could have a direct effect on how well you’ll live in retirement. We all know that both the income and estate tax rates are going to significantly increase as Washington seeks to fund the entitlements of healthcare, social security, Medicare, and Medicaid.

In the past it was always assumed that you would be in a lower tax bracket when you retired. With the projected increase in both income and inflation, you could very well end up in the same or a higher tax rate when you should be enjoying life.

In an ideal scenario, you could live income tax free with the right tax plan and balanced portfolio. In fact, the professionals at Quest Financial Services Inc. can show how the average family can live tax free on a pre-retirement income of $100,000 lifestyle. Call us to join your Quest for Financial Freedom.

This section will address the various types of taxes and penalties incurred during retirement and how to legally minimize or avoid them.

1. Let’s start with early retirement before 59.5 yrs old

A. Convert 401ks & IRAs to a Roth IRA as soon as possible
B. Lump sum rollover
C. 72t Distributions
D. NUA
E. Exceptions (Disability, Health, Home, and Education)
F. Multiple IRAs

2. Retirement after 59.5

A. Roth conversions & liquidations
B. NUA
C. Capital Gains
D. Reverse Mortgages
E. Tax free income
F. Capital distributions
G. Capital losses
H. Principle distributions / loans
I. Business loans
J. Sale of home / downsize of residence

3. Post 70.5 yrs old

A. RMD (Required Minimum Distribution)
B. 50% penalty for not taking RMD
C. Continued working

1. More contributions
2. Distributions

D. Trusts
E. CRT (Charitable Remainder Trusts}
F. CLT (Charitable Lead Trusts – opposite of a CRT)
G. Multiple IRAs
H. Spousal By-Pass Trust
I. Credit Shelter Trust
J. Annuities
K. Capital Liquidation
L. Spousal disclaimer