Tax troubles coming for IRAs and 401Ks over $300,000

“If you have more than $300,000 in a traditional IRA or 401K, you could have a big problem in retirement,” warns financial advisor Ryan Thacker.

“The problem is taxes – and this problem could only get bigger unless you take action,” adds Tyson Thacker.

Financial advisors Ryan Thacker and Tyson Thacker are the president and CEO of B.O.S.S. Retirement Solutions, a financial advisory firm that has helped over 50,000 area families plan for a better retirement.

For most traditional IRAs and 401Ks, the Thackers explain, it’s important to remember that you haven’t paid taxes on the money inside these accounts.

That’s by design. One of the biggest benefits of having an IRA or 401K is you don’t pay taxes on your contributions. And you also don’t pay taxes on the growth of your investments.

For a traditional IRA or 401K, this means you can avoid paying taxes on that money for decades – that is, until you need to withdraw this money in retirement.

“But that’s when this problem could rear its ugly head,” explains Ryan Thacker. “You’ll likely face surprisingly large tax bills when you start withdrawing this money in retirement.”

The problem is taxes – and this problem could only get bigger unless you take action.–Tyson Thacker, B.O.S.S. Retirement Solutions

On a retirement account of $300,000, the total tax bills on your withdrawals could easily be tens of thousands of dollars. And if you’ve saved even more, your tax obligations could exceed $100,000.

“Most families haven’t thought about this,” says Tyson Thacker. “They want to think of the money in their IRA or 401K as being 100% their money. But it’s really a joint account between you and Uncle Sam. Because remember, you haven’t paid taxes on this money yet. And the way tax laws are written, you can’t touch that money without giving a hefty share to the IRS.”

That’s because withdrawals from your IRA and 401K are all treated like ordinary income – and taxed accordingly. This also includes required minimum distributions (RMDs), which are ​​forced withdrawals that begin at age 73 and continue until your accounts are depleted, or you pass away.

“It becomes even more complex when these withdrawals are added to your monthly Social Security income and other investment income,” says Ryan Thacker. “While it’s wonderful to have many different sources of income in retirement, they create larger tax obligations.”

When you add it all up — your IRA and 401K withdrawals, Social Security benefits, and other investment income — you could be pushed into a higher marginal tax bracket without even realizing it.

“It’s important to understand how this works,” Tyson Thacker says. “Because you could end up paying far more in taxes than you have to, unless you take action now to reduce these future tax bills.”

The good news, according to the Thackers, is that you have more control over how much you pay in taxes when you retire, than at any other time in your life. The key is understanding the retirement tax planning strategies available to you – strategies B.O.S.S. often helps their clients implement.

You could end up paying far more in taxes than you have to, unless you take action now to reduce future tax bills.
–Tyson Thacker, B.O.S.S. Retirement Solutions

The Thackers emphasize that these savings come through tax planning, not tax preparation. By the time your CPA is filing your taxes for the April 15 deadline, it’s too late. You’re just reporting history.

However, if you take advantage of some specific tax planning strategies, you could significantly reduce your taxes in retirement – especially if you take these steps before you retire, or within the first few years of retirement.

Tax planning is personalized – there’s no one-size-fits-all solution.
–Ryan Thacker, B.O.S.S. Retirement Solutions

“We often work with families to ensure they have a diversified mix of pre-tax, taxable and tax-free income. For many, this can be the best way to minimize taxes and help you keep more of your hard-earned money in your pocket,” says Ryan.

“But the most important thing to find out is which strategy will work best for your family,” he continues. “You have to look at the total picture and consider all the strategies available. Tax planning is personalized – there’s no one-size-fits-all approach that I can share with you. But it’s very possible you could save a small fortune just by taking advantage of some of these simple tax-planning strategies.”

B.O.S.S. Retirement Solutions offers a free, customized Retirement Tax-Savings Analysis that shows you exactly how much money you could save.

During this quick appointment, they will show you how much money you’re projected to pay in taxes now, versus how much money you could potentially save by implementing some simple retirement tax planning strategies.

While some tax experts and financial advisors charge thousands of dollars for a customized tax analysis, B.O.S.S. Retirement Solutions offers this service for free, even if you’re not a client yet.

This analysis could be especially beneficial for families who have saved at least $300,000 up to a few million for retirement.

To schedule your free, no-obligation B.O.S.S. Retirement Tax-Savings Analysis, call (801) 990-5055, or click here.

About the Authors: Tyson Thacker and Ryan Thacker are the CEO and President of B.O.S.S. Retirement Solutions. They are published authors of the Amazon best-selling book, “The B.O.S.S. Retirement Blueprint, Your Guide to a Secure and Independent Retirement.” Their award-winning firm has seven offices located throughout the Wasatch Front, and a new office in St. George.

This is for illustrative purposes only, results may vary. Advisory services offered through B.O.S.S. Retirement Advisors, an SEC Registered Investment Advisory firm. Insurance products and services offered through B.O.S.S. Retirement Solutions. The information contained in this material is given for informational purposes only, and no statement contained herein shall constitute tax, legal or investment advice. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. You should seek advice on legal and tax questions from an independent attorney or tax advisor.