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Category Archives: Tax Planning

Tax-Free Insurance Upgrades

Tax-Free Insurance Upgrades

Responding to the changing needs of consumers, the life insurance industry has developed some alternatives that go much further in satisfying a variety of financial needs and objectives than some of the more traditional types of insurance and annuities. Advancements Modern contracts offer much more financial flexibility than traditional alternatives do. For example, universal life […]

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What Tax-Advantaged Alternatives Do I Have?

What Tax-Advantaged Alternatives Do I Have?

A strong savings program is essential for any sound financial strategy. We take Benjamin Franklin’s saying to heart, “A penny saved is a penny earned,” and we save our spare cash in savings accounts and certificates of deposit. Investors who’ve accumulated an adequate cash reserve are to be commended. But as strange as it sounds, […]

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What Tax Deductions Are Still Available to Me?

What Tax Deductions Are Still Available to Me?

Tax reform measures are enacted frequently by Congress, which makes it hard for U.S. taxpayers to know which deductions are currently available to help lower their tax liability. In fact, a former head of the IRS once said that millions of taxpayers overpay their taxes every year because they overlook one of the many key […]

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What Is Tax Deferral?

What Is Tax Deferral?

“Tax deferral” is a method of postponing the payment of income tax on currently earned investment income until the investor withdraws funds from the account. Tax deferral is encouraged by the government to stimulate long-term saving and investment, especially for retirement. Only investment vehicles designated as “tax deferred,” such as IRAs, plans covering self-employed persons, […]

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What Happens If I Withdraw Money from My Tax-Deferred Investments Before Age 59½?

What Happens If I Withdraw Money from My Tax-Deferred Investments Before Age 59½?

Withdrawing funds from a tax-deferred retirement account before age 59½ generally triggers a 10% federal income tax penalty; all distributions are subject to ordinary income tax. However, there are certain situations in which you are allowed to make early withdrawals from a retirement account and avoid the tax penalty. IRAs and employer-sponsored retirement plans have different […]

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Taxes on IRA and Employer-Sponsored Retirement Funds

Taxes on IRA and Employer-Sponsored Retirement Funds

Traditional IRAs and most employer-sponsored retirement plans are tax-deferred accounts, which means they are typically funded with pre-tax or tax-deductible dollars. As a result, taxes are not payable until funds are withdrawn, generally in retirement. Withdrawals from tax-deferred accounts are subject to income tax at your current tax rate. In addition, withdrawals taken prior to […]

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What Are the Tax Benefits of Charitable Trusts?

What Are the Tax Benefits of Charitable Trusts?

Americans give freely to support the causes they value, from churches, education, and the arts to medical research. Fortunately, current tax laws encourage and even reward philanthropy. Beyond the basic tax deductions for charitable giving, setting up one or both of the following types of trusts could provide financial advantages in addition to the personal […]

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What Is a Required Minimum Distribution?

What Is a Required Minimum Distribution?

A required minimum distribution (RMD) is the annual amount that must be withdrawn from a traditional IRA or a qualified retirement plan (such as a 401(k), 403(b), and self-employed plans) after the account owner reaches the age of 70½. The last date allowed for the first withdrawal is April 1 following the year in which […]

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What Is the Gift Tax?

What Is the Gift Tax?

The federal gift tax applies to gifts of property or money while the donor is living. The federal estate tax, on the other hand, applies to property conveyed to others (with the exception of a spouse) after a person’s death. The gift tax applies only to the donor. The recipient is under no obligation to […]

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