UNDERSTANDING RETIREMENT PLANS AND THE POSSIBILITY OF A TAX-FREE RETIREMENT
By Douglas A. Eze, President/CEO Largo Financial Services
What would you think if I told you that the Sun rises in the West? Sounds crazy, doesn’t it? But what if I told you there are some well-circulated financial beliefs, which are just as crazy as saying the Sun rises in the West? If you believed even one of those myths, how soon would you want to find out if it’s true or not?
For example, we have been told that most company spon- sored Retirement Plans are a good way to save for retirement. Yet, many have serious tax consequences which could hinder your plans for a financially secure retirement? We all know the advertised advantages, such as tax-deductible contribu- tions, tax-deferred growth and taxation at a lower bracket at retirement. Yes, the contributions may be tax-deductible, and those contributions do grow tax deferred, but at dis- tribution time, we may end up paying taxes on an amount much greater than our tax-deductible contributions. And instead of being in a lower tax bracket, we could begin paying at about the same or even at a higher tax bracket as when we began the plan.
Furthermore, access to funds within a Qualified Retirement Plan has restrictions. With few exceptions, all distributions are fully taxable events. Moreover, distributions before age 59 ½ are normally subject to a 10% Federal Tax Penalty on the amount withdrawn above and beyond any taxes which are due. Then, at age 70 ½, we must begin taxable distribu- tions at a rate designated by the IRS, whether or not we need those distributions. And if we fail to meet the Required Minimum Distribution (RMD), we must pay a 50% tax pen- alty on the amount we did not receive. Finally, at our death, with the exception of our spouse, the beneficiary must pay tax on the full amount in the account(s) in the year of dis- tribution, unless he or she elects to receive the distribution spaced out over an extended period of time. There are a lot of rules governing retirement plans and although there are advantages, we want our clients to be fully informed and not be surprised at retirement time.
Applied knowledge is POWER.
Largo Financial Services- “Where Financial Dreams Come True”
www.LARGOFINANCIALSERVICES.com
For the business owner, things may be even more complex. In many cases if a business owner wishes to take advantage of a Qualified Retirement Plan, he or she must include most or all of his or her employees in the plan, sometimes at the business owner’s expense and the reporting and filing requirements can be burdensome. The requirements and complexities could be a reason why many small business owners have not adopted any type of retirement plan. Cre- ating a secure and beneficial retirement for small business owners can be a challenge, but it doesn’t have to be. There are better alternatives.
If I told you there were options to plan for retirement that can avoid taxation in retirement if structured prop- erly, would you believe it? The reality is, there are such op- tions., Securing a Tax-Free Retirement isn't a new concept; it’s been around for decades, unfortunately, there are many small business owners’ that are un- such strategies exist.
aware that
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102