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Retirement Funds and Your IRS at Work

IraAlmost every American adult contributes to at least one retirement account that allows them a current income tax deduction or a tax-deferred account contribution (IRA's, 401k's, 403b's, 457b's and defined benefit plans).

When you start to take distributions our retirement accounts, you pay income taxes at ordinary income tax rates. Other retirement accounts, like Roth IRAs, don't allow a current deduction, but they’re tax free when you are ready to begin taking distributions at age 59½. A good-size Roth is a wise estate planning move. Since the IRS does not make you take withdrawals from your Roth over your lifetime, you can leave a tax-free "gift" to your heirs if you don’t spend it all during your lifetime.

Taxable retirement accounts are ignored because we’re so focused on IRS-approved retirement accounts. But you might think about supplementing your savings with a taxable retirement account. This can be a regular, old-school investment portfolio that’s not linked to any government regulations and that you’re building for retirement.  If you like to leave it to the next generation it's important to plan wisely especially in light of the fact that the Supreme Court has decided that inherited IRAs have no asset protection.  If the IRA is large enough, it may be wise to ask us about an IRA trust so that these assets can truly be stretched out over many lifetimes.  Register online for your complimentary consultation or give us a call @ 757.259.0707..

Here are some of the benefits of a taxable retirement account:

  1. You have complete freedom over investments;
  2. You’ve got total flexibility over your account;
  3. You can use your portfolio as collateral for a loan;
  4. You don't have to start withdrawing your taxable account when you turn 70 1/2;
  5. You have "basis" in your account, which means when you withdraw money, you pay taxes only on the growth;
  6. You only pay a maximum tax rate of 20% on long-term capital gains and qualified dividends (from stock held for at least one year);
  7. You can write off capital losses in the account;
  8. You can use income from the account to offset an unused investment interest deduction;
  9. Your heirs will enjoy a stepped-up basis if they inherit the account from you; and
  10. Your heirs don't have to start taking withdrawals from the account when they inherit it from you.

But be aware that taxable accounts aren’t protected in the event of a lawsuit, and you get basis instead of a tax deduction. That should be examined in light of your goals and insurance protection.

This doesn’t mean having a taxable account is your #1 priority when saving for retirement, but it should be up on the list based on your finances and the integration of tax planning with your short- and long-term financial goals. It can be a good filler for some of the gaps in your tax and retirement planning strategy.

Reference: Physician’s Money Digest (September 28, 2016) “10 Reasons You Need a Taxable Investment Account”

 

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We've been putting together as many resources as possible so that we can continue to help:

  • If you’re a current client with a signing appointment or a prospective client with a consultation and would prefer that meeting take place in your own home, we can accomplish that with a little bit of pre-planning on our part and with the addition of a laptop, smartphone, tablet or other computer in your home to facilitate this virtual meeting. For those of you that need to sign legal documents, that too can be accomplished with the use of a webcam (FaceTime etc.), so that we can witness and electronically notarize all of your important legal documents.
  • We launched the rollout of our on-demand webinar early so that new clients and our allied professionals can view the important component parts of ‘an estate plan that works’ at their convenience.  That is available on our website.
  • Live video workshops will be produced as quickly as possible and certainly ahead of our previous schedule; we will keep you posted as these events become available. Given the ‘boutique’ nature of the firm, we rarely have more than ten people in our office including team members at any one time. During this period of ‘social distancing,’ we promise to have no more than 8 people at any time.   This allows us to comply with the Governor’s directive to limit in-person gatherings.
  • The best way to communicate with us is still by phone during regular office hours of 8:30 to 5:00, Monday through Friday, or, you can email any of our team members (that is, their first name followed by @zarembalaw.com).  We will respond to these emails as quickly as possible.
  • Please continue to follow the directives of our local, state, and federal agencies. For your health and in consideration of our team who is assisting you, if you’ve scheduled an office appointment or planned to drop off paperwork and are experiencing a fever, dry cough, or shortness of breath, please contact your primary care doctor for guidance and then our office to reschedule.

Thank you, Walt and the Zaremba Team

Coronavirus/Covid-19
Update to our Process

The unprecedented coronavirus pandemic has taken our entire country by surprise. We understand how difficult this time is for America’s businesses and families.  However, we believe it is vitally important that we make every effort possible to continue to offer solutions that avoid disrupting our important partnership with you, your family and friends.  As you know, estate planning is not something that should wait for a more convenient time, therefore the opportunity to address your important goals both during and after this crisis should not wait.  To that end, we have added the option of a ‘virtual consultation’ to our office process.  You will now have a choice of either meeting with us in our office or in the comfort of your own home.