Tax planning determines retirement income strategies

I specialize in ‘lifetime’ tax reduction planning because such it affects the amount of taxes that you pay your lifetime and what your overall investment and retirement plans will be. The reduction of various taxes over each year and awareness of tax trigger events that create what I call tax traps must be actively planned for.

Tax traps occur when taxpayers innocently perform a life event that triggers not-so-nice tax liabilities. Below are a few such events:

  • Taking Social Security benefits at the wrong time,
  • Making large IRA/401k withdrawals when taking Social Security benefits,
  • Having tax deferral rollovers treated as taxable withdrawals,
  • Not making or making incorrect Required Minimum Distributions (RMDs),
  • Losing valuable ‘Stretch-Out’ withdrawal options for beneficiaries,
  • Getting taxed at higher Ordinary tax rates instead of lower or zero Long Term Capital Gains tax rates. E.g. Any employee who has Net Unrealized Appreciation in their IRA/401k/ESOPS, like Publix employees.

I know this can be boring but it’s important to know that lifetime tax strategies will help optimize your investment and retirement income by avoiding the numerous tax traps that impact your yearly tax bill significantly.

It is important to try to lower your tax bill. As Judge Learned Hand said:

“Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.”

Judge Learned Hand – Helvering v. Gregory, 69 F.2d 809, 810-11 (2d Cir. 1934).

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