Read What I'm Reading
SGH Wealth Management's Curated Web Newspaper
Published by
Sam G Huszczo, CFA, CFP
Friday, Sep. 6, 2019 Read paper
Early Stage Retirement Income Tax Planning (RMD Tax Planning)

As year-end financial planning season approaches, there may be a window of opportunity with the lowered tax brackets of the Trump Tax Reform Act sunsetting in 2025. One thing that Early Stage Retirees generally do not prepare well for is Required Minimum Distributions (RMDs), where the IRS forces you to take taxable distributions from your Retirement Accounts at age 70.5. The RMD distribution along with social security, pension income (if eligible), and any other forms of income may move you into a higher tax bracket at that time with limited tax strategies available if not planned for in advance.

Due to tax rates currently being at historically lower levels, we believe now may be an ideal time to analyze if a systematic Roth Conversion strategy makes sense for you. When you convert assets from a Traditional IRA to a Roth IRA the conversion amount will be considered ordinary income and subject to federal and state taxes. However if spread out over years with a goal of “filling up” these lower tax brackets, it could lead to a future reduced tax bracket in the ages of 70.5 and beyond, as Roth IRAs are not subject to Required Minimum Distributions (RMDs).

This is a long term strategy and does not make sense for everyone. For us to complete this analysis, we would need to know what you anticipate your total taxable income will be for this year and we could then put together a Monte Carlo back-tested projection to put data behind this potential Roth Conversion decision. For our clients, this is an annual exercise that does not come with any additional costs. Reach out if you believe you might be a good candidate for this or would like to learn more (or if there was anyone around you that is in the early years of retirement or close approaching).

**$50 Bonus on a $500 Contribution made to MESP 529 Savings plans in September: Free 10% return on college savings:

See Investment News' coverage on our creative uses of the 529 College Savings Plan in the top article below: 

529 savings plans are not just for college anymore
www­.investmentnews­.com - Shared by Sam G Huszczo, CFA, CFP
thumbnail The nation's most widely used investment vehicle for paying for college is also becoming popular as an estate planning tool and for financing other non-college-related costs thanks to recent tax chan…
Democrats’ Emerging Tax Idea: Look Beyond Income, Target Wealth
www­.wsj­.com - Shared by Sam G Huszczo, CFA, CFP
thumbnail The income tax is the Swiss Army Knife of the U.S. tax system, an all-purpose policy tool for raising revenue, rewarding and punishing activities and redistributing money between rich and poor. The s…
This Little Noticed S&P Index Is Up 25% This Year—and Offers a Hedge Against Wild Market Swings
fortune­.com - Shared by Sam G Huszczo, CFA, CFP
thumbnail A durable piece of conventional wisdom holds that stocks that carry higher risk also reward their shareholders with higher returns. But as 2019 unfolds, that notion is looking, at least in some respe…
10 Ways the Wealthy Buy Privacy | ThinkAdvisor
www­.thinkadvisor­.com - Shared by Sam G Huszczo, CFA, CFP
thumbnail How many physicians do you know socially? Probably not many. You know lots of accountants and lawyers, but few anesthesiologists or heart surgeons. If there is a big hospital nearby, they must live s…
TSA PreCheck Vs. CLEAR: Reduce Security Time At Airports
www­.forbes­.com - Shared by Sam G Huszczo, CFA, CFP
thumbnail The process of checking in and going through security at the airport has become a pain — and can add hours to your travel time. Lately, there have been efforts created to reduce the amount of time it…
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