Taxes and Your Retirement

I'm pleased to share this newsletter with you to keep in touch and pass along a few helpful tips. It's important to regularly monitor your financial health and this will give you a few ideas on items you need to keep in mind. Please give me a call if you would like to discuss any of your insurance needs or your questions regarding ways you can build your retirement assets or set up an effective retirement income flow. If you haven't scheduled an annual review yet, I encourage you to give me a call to get that set up so we can make sure all your goals are on track.

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 70��, 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.

Tony Koehler
Koehler Froman Insurance Services, Inc.
403 Main Street
Warsaw, IL 62379
awkoehler@gmail.com
www.TonyKoehler4Life.com
217-919-0457

The information provided here has been taken from third party sources and is deemed to be reliable, but is not guaranteed.
It is provided for informational purposes only, and you should consult with a tax advisor for further information.
Our organization does not provide tax advice.
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