Taxes are one of the greatest liabilities you will face in your lifetime. You need a strategy to reduce tax liability so it doesn't sink your retirement plan.
I hate to be the bearer of bad news, but your 401(k) is NOT safe from taxes in retirement. In fact, you will owe taxes at your ordinary tax rate on any withdrawals that come from a traditional IRA or 401(k) in retirement.
Is there any way to avoid these taxes? Yes!!
One strategy you can consider is a Roth Conversion. Before taking action on the information below, make sure you consult with tax and/or financial professionals.
This is how you could convert a traditional retirement account into a Tax-Free Cash Cow with a hypothetical example...
Step 1: John (Age 50) has a traditional retirement account with a $30,000 value. He decided to work with his financial professional to convert his account to a Roth IRA.
Step 2: This action creates a one-time taxable event for John. This $30,000 conversion counts as income in the current year, and falls into the the 22% tax bracket. John owes $6,600 ($30,000 x 22%) when he files his taxes next year. It's important to note that this amount will vary depending on the tax bracket you are in.
Step 3: John continues to contribute $5,000 per year to his Roth IRA for 15 years until he reaches age 65. He earns an average annual return of 9% (returns not guaranteed). At age 65, John has approximately $255,000 in TAX-FREE retirement savings (Yes, completely tax-free withdrawals)!
Want to see if this strategy is right for you? Book an appointment and we would be happy to learn more about you and your situation.
Schedule an appointment: https://go.oncehub.com/SamuelShinn1