Retirement Income
Tax Advantaged Structures to Maximize Retirement Income
For high wage earners seeking to maximize their retirement income, tax-free compounding is essential. Unfortunately, traditional retirement accounts, such as 401(k)s and Roth IRAs, have significant contribution limits.
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Supplemental Retirement
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The Secure Act
SUPPLEMENTAL RETIREMENT FUNDING
For high wage earners seeking to maximize their retirement income, tax-free compounding is essential. Unfortunately, traditional retirement accounts, such as 401(k)s and Roth IRAs, have significant contribution limits.
1. 401(k) annual contributions are limited to $23.5k
2. Roth IRA annual contributions are limited to $7k
3. Couples earning more than $246k may not contribute to a Roth IRA
Applicability
Clients with available cash flow who want to create additional reserves for future retirement income. The strategy utilizes a life insurance vehicle designed to maximize long-term tax favored cash value accumulation.
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Values accumulate without being taxed
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Investment allocation can be customized (depending on product type)
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Policy values can be withdrawn without a taxable event (1)
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Accumulated value is income tax-free upon death
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Can be structured to avoid estate taxes
The Secure Act
The Secure Act became law on December 20, 2019 and was recently revised as part of the Consolidated Appropriations Act. The Act requires most beneficiaries of IRA owners to withdraw the entire inherited IRA balance no later than the 10th full year following the IRA owner’s death, therefore eliminating the popular “stretch” IRA strategy for most beneficiaries.
Eliminating the stretch provision accelerates the beneficiary’s tax burden. In addition, the potential increase in income taxes further impacts this analysis. Moving assets from a traditional IRA to a non-taxable life insurance policy or converting the traditional IRA to a Roth IRA may be attractive options.
Applicability
Clients with IRAs who want to transfer maximum wealth to their beneficiaries or are concerned about income taxes increasing in the future.
Reduce the Impact of Income Taxes.
Transfer Market Risk, Guarantee Outcomes, and Reduce Taxes.
Maximize Funds Transferred to Family or Charity.
Tax Advantaged Structures to Maximize Retirement Income.
Retain and Incentivize Key Employees to Protect the Future.
A Powerful and Tax-efficient strategy to Fund Large Life Insurance Premiums.