How to Keep Your Retirement Assets Out of Congress’ Reach

How to Keep Your Retirement Assets Out of Congress’ Reach

As I explained in my last column, from my vantage point, the recent “fiscal cliff” deal amounted to tax increases on the rich, middle class, and poor alike. As you may remember, the whole idea was to tackle – in a meaningful way – our federal debt/deficit problem. So here’s the simple question: Was that goal accomplished? The straightforward answer is: Not even close!

So what’s next? Could more tax increases be coming down the pipe? If that were to happen, would your retirement income be crushed? Interesting questions, aren’t they? I think smart financial advisors (and investors) should be having these discussions right now, if they have not already. Wouldn’t you agree?  

You see, under existing IRS rules, your income could be either taxable or nontaxable. As the names imply, taxable income is 100 percent taxable, but you pay zero tax (as in nothing!) on nontaxable income (read the next words slowly) regardless of how much of it you earn. That’s almost unbelievable, isn’t it? However, as some like to say, the law IS the law.

From the way things are looking in Washington, D.C., if you have money sitting in yet-to-be-taxed 401(k)s, IRAs, 403(b)s, or whatever they might be, you’d be wise to visit with a savvy advisor who can help you reposition some of your assets into vehicles that would generate nontaxable income.

That way, regardless of how low or high tax rates go in the future, you could rest assured that you wouldn’t face any nasty surprises. Generally speaking and for the most part, some very simple tweaks are all that would be required to achieve this. However, you will need a savvy, experienced advisor who knows exactly what he/she is doing.

For a much more detailed look into specific vehicles and strategies, get a copy of my acclaimed book, 5 Mistakes YourFinancial Advisor Is Making.

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