There are a several ways financial advisors can decrease the toll taxes take on retiree clients’ portfolios. Shakespeare President, Kevin Reardon, shares his thoughts on the matter in this CNBC article.
Planning Retirement Income Taxes
Timing and income can have a positive (or negative) affect on your income tax. Planning accordingly can save clients thousands on their tax returns. “Deferring capital gains can protect inheritances. Upon death, every person receives a “step up” in basis, thereby eliminating capital gains on appreciated assets. When someone passes away, the cost basis of an asset is raised to the market value at the time of death. For older or sickly clients, it may make sense to defer taking capital gains until they pass.” -Kevin Reardon
Shakespeare saw this first hand and knew the right steps to save a client over $100,000 in taxes. Read the full story here.
Expenditures Tax Benefits
“Those who have non-qualified annuities can use them to pay long-term care premiums. Although withdrawals from annuities are taxable income, you can direct assets out of your non-qualified annuities to pay for long term care premiums and these ‘transfers’ aren’t taxable.” -Kevin Reardon
A few other quick tips include:
- Under certain circumstances, some are able to donate their RMDs directly to charity.
- Those with high-deductible health-care plans can fully fund their Health Savings Accounts (HSA) up to the full limit ($6,750/family). This allows you to contribute pretax dollars to be used for medical expenses and the withdrawals are not taxed.