Reduce Income Taxes

Reduce Income Taxes

 

Overview. Most baby-boomer retirees rely more on withdrawals from their 401k plans and IRAs than did their parents, who relied on employer-sponsored pension plans. Also, many baby-boomer retirees, in contrast to their parents, have to pay income tax on their social security benefits because of changes to the Tax Code that were enacted in 1983 and 1993.

Fortunately, the progressive rate structure that is baked into the Code makes it possible for baby-boomers who plan their retirement cash flows to greatly reduce their income tax liabilities. Tax reductions for some can be achieved by coordinating social security choices with planned 401k and IRA withdrawals.  Tax reductions can also be achieved by timing 401k and IRA withdrawals, from year to year, and by repositioning some of the funds withdrawn into financial assets that are never taxed. In general, the sooner this type of tax planning starts the greater are the tax savings for the client.

 
Opportunity Costs. In evaluating the merits of tax reduction strategies it is important to keep in mind not only the tax payment itself but also the “opportunity cost” associated with the tax payments. Here I’m referring to what the dollars paid in taxes would have earned had the funds been saved rather than remitted to the government as income taxes.
 
It is also possible for an individual who plans in advance to reduce income tax liabilities that his or her children will face on inherited funds.

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I offer a free initial consultation. We can meet at my office in The Brooks Executive Suites, 9990 Coconut Rd, Bonita Springs, FL, 34135. We can also meet online if this is easier for you. If what I do sounds like something you’re looking for in an attorney I encourage you to contact me through the form below or simply call (239) 266-5671.

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