Category Archives: Financial Planning

401K and IRAs Are “Tax Infested”

401(k) and IRAs are “tax infested.”
Qualified Retirement Plans are “infested” with deferred taxes; all that money, that you did not pay in income taxes while working/saving over all those years, PLUS the growth on that money, has a tax-bill due.
When you take income from your 401(k) or IRA, it is taxed at the highest income tax rates (ordinary income rates). The lower tax rates on investment accounts such as Long-Term Capital Gains do not apply .
Beginning at age 70 1/2, the IRS forces you to take at least a minimum amount from your 401(k) and IRA whether you need the money or not; these are called Required Minimum Distributions, and they increase with each year as you age. Those with large 401(k) and IRA accounts often find themselves having to withdraw much more from their plans than they anticipated, creating a very large annual tax bill. Similarly, when your children inherit your 401(k) or IRA, they have to pay taxes on the inheritance as well, often vaulting them into a higher tax bracket.
In retirement you could face a pretty high tax bill. Most retirees, especially those who have accumulated significant assets, typically have fewer tax deductions.
To get more information and assistance with retirement planning, please check and contact: http://www.AtulCFP.Com

How is your Financial Bucket?

We are doing community its outreach in the Tri Valley area. Educating on your financial bucket and is it secure? We would be happy to provide free guidance regarding estate planning, Medicare, Long Term Care, college planning and putting the proper protections in place.
We need to hold on to what we have!
Call me at 650-219-4235 and ask for Linda Papciak.