Managing Taxes with Non-Qualified Monies in Retirement Increases Cash Flow
The focus on retirement monies is generally in the ERISA qualified plan area. But a successful retirement plan must also include non-qualified monies to help manage taxes and defer Social Security benefits as well as qualified plans to age 70. Non-qualified monies are reverse mortgages, Roth IRAs, annuities and life insurance. The timely deployment of these non-qualified monies can help a retiree maximize their income while potentially reducing their taxes.
Non-qualified, tax-advantaged monies can be classified into two categories: tax-deferred, taxable and tax-deferred and tax-free.
Tax-Deferred Annuities and Modified Endowment Life Insurance Contracts (MEC) accumulate without taxation on the gain. When distributions are generated, all gains are taxed as ordinary income and are includable in the Social Security provisional income test that can trigger taxes on your benefits. But the tax deferral can come in handy when you have other income sources generating revenue and you can delay the annuity or MEC income for another time. Managing taxes during retirement can increase your net-spendable income, so you can keep more of your money.
Non-Modified Endowment Life Insurance Contracts1, Reverse Mortgages and Roth IRAs accumulate tax deferred and generate tax-free distributions. But a huge advantage is they are not considered reportable income for the Social Security provisional income test that can trigger taxes on your benefits. So it is conceivable with enough tax deductions, exemptions and tax credits, your Social Security benefits could potentially be tax-free as well as these other tax-free items. Watch the interview with popular platform speaker, asset management and life insurance specialist Rob Hagg as he addresses the tax advantages of life insurance income in retirement.
There are several retirement strategies and tactics using tax-advantaged, non-qualified monies that can maximize your income and reduce taxation resulting in more net-spendable income so you can keep more of your retirement money.
1 Non-Modified Endowment Life Insurance Contracts are comprised of two types of tax-free distributions: one is tax-free basis; the other is tax free collateralized policy loans. To ensure tax-free distributions, Non-Modified Endowment Life Insurance Contracts must be kept in force for the life of the policy insured.
Nationally syndicated financial columnist Steve Savant interviews with popular platform speaker, asset management expert and life insurance specialist Rob Hagg. Right on the Money is a weekly one-hour online broadcast for TV and radio distribution. The show contains five ten-minute segments that are redistributed online as individual video press releases.
