Category Archives: Tax Planning

  • Navigating the Inflation Landscape: Tax Planning Strategies for 2024

    The inflation rate has precipitously dropped from the forty-year highs we saw in 2022, but it remains elevated. While we are seeing the relief on prices, there are some positive impacts of higher inflation. The IRS links tax brackets, deductions, and retirement savings contributions like 401(k)s to inflation, allowing for increased retirement savings, reduced taxes, and higher earnings without shifting into a higher tax bracket. Despite expected decreases in inflation, changes in tax brackets, standard deductions, and contribution limits are likely to remain permanent ... Read More

  • Rethinking Tax Planning in Retirement from a Risk Perspective

    When building a financial plan for every stage of your journey, from early working years to retirement, consider saving, investing and tax planning in retirement as foundational elements. Starting early, saving as much as possible, and being thoughtful about how you allocate your portfolio to balance risk and return potential are the basics for most investors. As you begin to have more income, and your investments start to grow through the power of compounding, taxes begin to become more important ... Read More

  • Required Minimum Distributions – Here’s How To Avoid Penalties

    As retirement age approaches, individuals need to understand the significance of RMDs and the potential penalties for not taking them. This article will define RMDs, discuss their importance, and provide valuable insights for anyone nearing retirement age. Taking a proactive approach to RMDs can help retirees avoid penalties and seize opportunities. So, to ensure a smooth retirement journey read on to learn more about the required minimum distributions ... Read More

  • The Roth-Only Catch-Up Contribution Rule Will Get Time to Catch Up

    The catch-up contribution rules in The SECURE 2.0 Act (passed in December 2022), were changed significantly by the IRS. The catch-up contribution allows those aged 50 and above to contribute an additional $7,500 to an employer-sponsored pre-tax retirement plan. SECURE 2.0 tied that contribution to income level. This rerequires individuals earning $145,000 and up to make that contribution to a Roth account with after-tax dollars. Roth accounts are useful in retirement planning to help manage taxable income in retirement. However, losing the tax deduction of the catch-up, which had previously been made with pre-tax dollars, is a substantial change ... Read More

  • You’re Maxing Out Your 401(k). Should You Invest After-Tax in an IRA?

    If you are maxing out your 401(k) plan, investing after-tax in an IRA may be worth considering. While the contribution won't be tax-deferred, it will still grow tax-free. Plus, it can provide an additional source of income in retirement. And since you contributed with after-tax dollars, you can withdraw them tax-free, and only the growth will be taxed in retirement. This gives you some control over your investment income ... Read More

  • Spousal IRA – How to Save for Retirement AND Pay Less Taxes

    If you and your spouse both have access to an employer-sponsored 401(k) plan, retirement saving is as easy as specifying the pre-tax contribution amount to be deducted from your paycheck. But for many couples, it’s a little more complicated and involves a spousal IRA. The decision may be for one spouse to leave full-time work for a period of time to care for children or parents. Or one spouse may have started a new business that currently doesn’t generate any income ... Read More

  • Asset Location: A Tax Lens on Retirement Investing

    You’ve built a retirement nest egg by saving consistently and investing carefully. An asset allocation that allowed growth but gradually reduced risk as you got closer to retirement was probably part of the plan. But once you’re in retirement, your focus shifts a bit to also include asset location. The value of having accounts with differing tax statuses becomes apparent when you set out to create an income stream and start withdrawing money. The return profile of the asset and how it is taxed can make a great deal of difference to both the overall return of the portfolio over time, and the amount of taxable income generated each year ... Read More

  • The Secure Act of 2022

    The SECURE 2.0 Act of 2022, a bipartisan retirement savings bill, was included in the $1.7 trillion budget bill that President Biden signed on December 23, 2022. Since the retirement savings law makes numerous changes to the current rules governing retirement accounts, SECURE 2.0 is anticipated to reshape retirement tax incentives for years to come. This includes some related tax breaks as well as (but is not limited to) 401(k), 403(b), IRA, and Roth accounts. And those modifications might influence your personal finances and retirement savings. Our retirement experts at Hennion and Walsh are prepared to lead you in the right direction. We’ve compiled a list of the most essential changes to note ... Read More

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