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Retirement Planning

If you are retiring and you have a 401K, you may consider liquidating your 401K, remaining in your current plan, rolling over the money into an IRA, or investing in annuities.  When retiring, the least preferable option is to liquidate your 401k. This will not only create a large tax liability but also push you into a higher tax bracket, according to the current IRS tax rules. You will also be responsible to pay taxes in successive years.

Learn how you can keep your retirement savings tax free and turn your investment into retirement income.  Contact a professional retirement planner to help you with your options.

IRA accounts were created according to the 1974 Employee Retirement Income Security Act, or ERISA. There are several types of IRA accounts, the most popular are the Traditional IRA, Roth IRA, Simple IRA, and SEP IRA. Rolling over your money directly into an IRA will help you avoid the 20% tax withholding and may be a good option.  If you choose to invest in annuities, it will give you a fixed payment for the rest of your life or until the money runs out. The disadvantage to this is that your payment will be fixed and your circumstances may change. To effectively plan for retirement, it is useful to consider the following:

  • 401K Accounts
  • IRA Accounts
  • Annuities
  • Tax Implications in Retirement
  • Funding College and Retirement
  • Estate Planning
With a Roth IRA, a tax break is given only when the money is withdrawn during retirement.  However, there may also be increased tax liabilities such as a tax on pension income if you move to a new state.  And income taxes may be owed on mandatory withdrawals from your IRA or retirement plan when you reach 70 1/2 years.

When considering Estate Planning, creating wills and trusts is a popular option to help protect property and assets.  However, many are concerned about the tax implications of estate planning when the money is going towards paying for college. There is a dual benefit when funding children’s education if at the same time it will be reducing the estate tax.  But in some cases it increases the tax burden because under the Uniform Gifts to Minors Act, any future earnings or capital gains will be reported and may require the parents to include it in their taxes.  It is important to contact an expert in your state who can help minimize any future tax implications.

Can’t rely on Social Security?  Can’t rely on pensions? If you are concerned that Social Security will not be sufficient to cover your retirement needs or if your employer does not offer pension plan.  Contact a financial planner who can help you save for your retirement.