Tax Planning Services St. Louis, MO. A key component to any strong retirement plan is understanding that your tax situation throughout retirement is fluid, and that America's complex tax code often penalizes retired individuals more than those actively earning a wage or salary. Each year, millions of people overpay taxes without even realizing that they are paying too much. As a result, money they had been counting on to be available when they retire is in the hands of Uncle Sam instead of their retirement accounts.
However, there are multiple, perfectly legal ways to reduce your tax liability while ensuring that you can retire comfortably on your terms. At Correct Capital, our St. Louis retirement tax planning experts can take you through multiple options that optimize your income and tax strategy for both today and in the future. Call us today at 314-930-4015 or talk to us online to learn more about our full array of retirement planning services and how a Correct Capital financial advisor can put you on the road to financial peace on your terms.
What Retirement Income Is And Isn't Taxable?
Knowing what retirement income sources are subject to taxes and which ones are not is not always easy. The IRS annually outlines taxable options in a document called Publication 915, which is usually used when filling out a 1040 for your tax return. In general, the following sources of income are taxed:
- Up to 85% of your Social Security benefits, depending on the amount of income you have from other sources
- Withdrawal of earnings and pre-tax contributions from IRAs, 401(k)s, and other retirement plans. Some stock in 401(k)s, namely appreciated employer securities, are also subject to special rules
- Defined-benefit pensions
However, the following common retirement income sources are not taxed:
- Withdrawals of after-tax contributions from 401(k)s, IRAs, or other retirement savings plans. Whether withdrawals are considered to be from "after-tax" or "pre-tax" contributions or earnings depends on the law and ordering rules applicable to your specific account
- Qualifying withdrawals from Roth 401(k)s, Roth IRAs, Roth 403(b)s, and Roth 457(b)s
Giving You Options To Limit Tax Liability
While most people are aware of certain tax-exempt or lower-tax strategies, such as charitable giving or capital gain offsets, there are a wide number of ways you can reduce the amount of taxes you pay during your retirement. The St. Louis tax planning experts at Correct Capital can suggest various methods to limit your tax liability, including:
- Roth Conversions
- Qualified Charitable Distributions from an IRA, for those aged 70 1/2 or older
- Selling a home/property
- Spreading withdrawals from your IRA/401(k) out over more time
- Investing in municipal bonds
- Bunching itemized deductions in a tax year, as opposed to taking the standard deduction
- Realizing long-term capital gains if your income (including said gains) falls below the threshold for your filing status
Retirement planning and selecting the right combination of accounts based on tax schedules are an important piece of your financial puzzle. Each situation is different, and a qualified retirement consultant or tax planning professional like the financial advisors at Correct Capital can help you make the most of your situation to make your money work for you.
Smart Tax Planning from St. Louis Retirement Tax Planning Experts
With recent changes in tax laws, it has never been a better time to meet with a retirement tax planning advisor in St. Louis and map out a strategy to balance your retirement income and priorities with tax implications and liability. Contact one of our retirement tax planning specialists today by calling 314-930-4015 or online to speak with a member of our team or learn more about our full complement of financial planning services.