DISCOVER HOW TO PROTECT YOUR WEALTH FROM FUTURE TAX LIABILITY
"Taxes have to be paid on pre-tax retirement accounts but you don't have to use your own money for this obligation."
We've all been told since the 1980's when IRA's, 401k's and other qualified accounts came into existence that we should defer taxes until we retire, as we'd be in a lower tax bracket. Back then that advice made a lot of sense. The National Debt to GDP ratio was favorable. Top marginal tax rates beginning in the mid-1960's were never below 70%, then were lowered to 50% in 1982. The Tax Reform Act of 1986 lowered the top marginal rate to 28% and raised the bottom tax rate from 11% to 15%. The current top tax bracket is 37% and the bottom marginal rate is 10%. Once the 2017 Tax Cuts and Jobs Act expires at the end of 2025, unless Congress acts, all marginal rates, other than the bottom rate of 10%, will rise.
So, most Americans have accumulated the vast majority of their retirement savings in traditional pre-tax accounts.
Like traditional retirement accounts, Roth accounts also grow tax deferred. That means they grow and compound faster than taxable Non-Qualified accounts.
Tax free income has multiple benefits! See below.
Current tax rates (2024) are close to historical lows. To minimize taxes, we want to pay our taxes at the lowest rate possible. Better to pay the taxes at today's known low rate versus tomorrow's unknown and possibly higher rate.
Paying less in taxes over time increases portfolio longevity.
Income from Roth accounts are not part of the Provisional Income calculation used to determine whether/how much SSI is taxed.
Paying income tax upfront on a Roth Conversion will be substantially less than paying a lifetime of taxes on increasing RMDs.
This is one of the best ways to prevent creating a tax problem for your beneficiaries with Non-Spousal Inherited IRAs.
The Roth conversion strategy involves converting traditional IRA or 401(k) accounts into Roth accounts, which offer tax-free growth and withdrawals in retirement. This can be especially beneficial for those who expect to be in a higher tax bracket in retirement due to future tax increases or want to leave a tax-free inheritance for their loved ones.
Taxes have to be paid on pre-tax retirement accounts, but you don't have to use your own money for this obligation. This effectively takes the sting out of Roth conversions.
We are partnered with some of the biggest and most financially sound companies in the financial world. These companies are willing to offer substantial bonuses on deposits, which we use the offset our client's tax liability on Roth conversions. We have special software to calculate the projected taxes, the number of years to spread out the conversions and offer a variety of strategies which best suit our client's situation. We will reposition our clients to avoid RMDs and future taxes.
This cutting-edge strategy can potentially save individuals and families thousands of dollars in taxes and significantly increase their retirement savings. It's a game changer for those looking to secure a comfortable retirement.
Retirement Tax Advisers, LLC
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