1. Pay Now, Enjoy Forever
Convert eligible retirement accounts to a Roth IRA (Individual Retirement Account). In a nutshell, by doing so you’ll pay taxes now for a relatively tax-free future, which in some cases, can be passed on to heirs. Roth IRAs also feature tax-free withdrawals and no Required Minimum Distributions (RMDs).
2. Know Your Limits
Keep retirement accounts off-limits until retirement. The aforementioned RMDs can have the unintended consequence of increasing taxable income (when taken from a qualified retirement plan).
Formulate a methodical retirement income-distribution plan utilizing qualified and non-qualified accounts in a tax-advantaged manner.
3. The New House Rules
Real estate had received relatively favorable treatment in the eyes of the Internal Revenue Service for generations. With rising mortgage rates and $10,000 annual SALT limitations, that favorable treatment is no longer so favorable. What can you do?
Downsizing can make financial sense, especially if the kids are gone. It will likely result in lower real estate tax and lower expenses across the board such as for insurance and maintenance. Renting can offer similar savings.
If divorce is in your future, give careful consideration to the fate of the family home. Speak with a tax advisor to see if this traditionally prized asset will be as valuable under the new tax code.
4. Crunch and Bunch
When the numbers crunch, it can pay to bunch. With an increased standard deduction, spreading major expenses across several years may no longer be as practical as before. To maximize deductible expenses, including medical, real estate taxes and charitable contributions it will likely pay to “bunch” them in the same tax year, enjoying the deduction each year you meet the requirements.
Thanks to the new tax code each of the tax-minimization methods mentioned here requires planning. The Eastern Planning team however is ready to help you make the most of your retirement and to help lessen your tax liability. To discuss your situation in detail, please visit: or contact: / 845-627-8300.