Issue 9.17
Instead of just handing over all your paperwork to your CPA this year, consider meeting with a financial advisor who specializes in tax planning to get a completely different perspective and outlook on your tax picture.
A CPA is trained to look BACK over your tax year and prepare your tax return, getting you the most deductions (therefore the lowest tax bill) that he or she can, based on what you’ve done the previous year.
A financial advisor, on the other hand, is trained to look AHEAD through the years—all the way through retirement—to age 100 or beyond. A financial advisor can help you make adjustments to your investments and financial choices that can help reduce your overall tax burden.
The biggest tax issue retirees face is proper handling of their RMDs (Required Minimum Distributions) or withdrawals correctly from their 401(k)s, IRAs, or other tax-deferred retirement accounts. The wording of the law can be confusing. Starting at age 70-1/2, EACH account is subject to RMDs, which must be taken by December 31st of EACH year.
What happens if you didn’t know, you interpreted incorrectly or you forgot—which, by the way, happens to millions of people every year? A whopping 50% of the RMD amount—PLUS taxes owed—can be taken by the IRS! And there is no statute of limitations on this.
A good financial advisor will sort this out for you in advance, even creating a “draw-down” retirement income plan that outlines what needs to happen each year. They may even go one step further, finding new potential strategies to mitigate your taxes throughout your lifetime and beyond.
It’s not just how much you money you MAKE in your lifetime, it’s how much money you KEEP—and pass on to your family members.
Eric Scott has worked in the financial industry for more than 33 years. If you have questions about what tax planning can do for you, reach him at 435-773-9444 or info@ericscottfinancial.com.