Insights
🗣️ “I’ll pass down the money I don’t use in my IRA/401(k) to my kids.”
I hear this often in my meetings with clients when we talk about legacy planning.
Many people want to leave money behind to their heirs, but most don’t know how to do this tax efficiently.
Did you know, if your non-spouse beneficiaries inherit your IRA/401(k), they will have to withdraw the entire balance over a 10 year window and still pay 100% taxes on the distributions (under The Secure Act 2.0)?
They will also have to pay this at THEIR OWN ordinary income tax rate, which we often see beneficiaries receive an inheritance at their highest income years (ages 50-60 years old).
This can be thousands of dollars in tax liability for your children, grandchildren, or whoever you want to pass your money down to, which can take a toll on them financially.
So how do we mitigate this? We help clients pass down assets that will NOT include a detrimental tax liability to their heirs, instead assets that will be passed down with tax advantages.
Disclosures: thrivent.com/social
Client: 🗣️“I thought we were just going to talk about how much returns you could get me on my investments?”
A couple came in for our first meeting together a couple weeks ago. We in fact did NOT just talk about the returns I could get on their investments.
We dove into our financial planning software together and outlined their financial goals, “needs, wants and wishes”, some fears about retirement, and even had discussions about the legacy they want to leave to their heirs. They are 5-7 years away from retirement.
By the end of it, we discovered they had a 61% chance of completing what they want without running out of money. This was a great start considering they had never consulted a Financial Advisor before.
The husband asked “I want to get that to 100%, how to do we do that?”
I responded with “Let’s get to work!”😉
Disclosures: thrivent.com/social
