Exactly correct - the same as rolling a 401(k) into an IRA Rollover as well. The idea is to give you more control of WHEN to pay the taxes and to pay them in moderation. IMPORTANT - pension income is considered ordinary income (i.e. salary, wages, etc) and the income amount will apply to the marginal brackets. The more pension income you recognize, the more taxes you will pay. The strategy is to build a long-term plan understanding how much to recognize each year in order to manage your taxable income appropriately. If you'll watch a few more of our videos, you will see there are several tax minimization strategies we can employ to reduce your total taxes due from IRA distributions.
It’s bad enough we spend a majority of our life working and paying in to these crooks…we also have to spend a good portion of our lives learning how to keep from having to pay in way too much in tax by just doing what they tell us to do…
And a good reason to have trained professionals on your side to navigate the best strategies to minimize the taxes. Not to "pour salt on the wound", but don't forget that above minimum income levels, 85% of your Social Security benefits will be taxable as well!
Real estate is an important diversifier for a retirement portfolio but needs to be allocated appropriately to minimize risk. Don't forget that real estate carries liquidity risk. The tax treatment of real estate can be a benefit due to the deductions and depreciation, but that depreciation will also lower your cost basis creating the potential for taxable gains if you sell the property without a 1031 exchange. There are still risks that need to be considered for retirees.
Great content.
Thank you Elisa! Check out our website for more. www.engravewealth.com
Isn't taking the lump sum from a pension and putting it into an IRA Rollover just delaying the payment of ordinary income taxes.
Exactly correct - the same as rolling a 401(k) into an IRA Rollover as well. The idea is to give you more control of WHEN to pay the taxes and to pay them in moderation. IMPORTANT - pension income is considered ordinary income (i.e. salary, wages, etc) and the income amount will apply to the marginal brackets. The more pension income you recognize, the more taxes you will pay. The strategy is to build a long-term plan understanding how much to recognize each year in order to manage your taxable income appropriately. If you'll watch a few more of our videos, you will see there are several tax minimization strategies we can employ to reduce your total taxes due from IRA distributions.
It’s bad enough we spend a majority of our life working and paying in to these crooks…we also have to spend a good portion of our lives learning how to keep from having to pay in way too much in tax by just doing what they tell us to do…
And a good reason to have trained professionals on your side to navigate the best strategies to minimize the taxes. Not to "pour salt on the wound", but don't forget that above minimum income levels, 85% of your Social Security benefits will be taxable as well!
Or just invest in real estate for the best tax treatment.
Real estate is an important diversifier for a retirement portfolio but needs to be allocated appropriately to minimize risk. Don't forget that real estate carries liquidity risk. The tax treatment of real estate can be a benefit due to the deductions and depreciation, but that depreciation will also lower your cost basis creating the potential for taxable gains if you sell the property without a 1031 exchange. There are still risks that need to be considered for retirees.
It takes only one tenant from Hell to make you regret the investment in real estate. Been there, done that, would rather pay taxes!
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