STAY RICH FOREVER WITH ED SLOTT
Exit Strategy
Most people don't have a plan to withdraw their retirement income.
SHIP
The SHIP Slott refers to is an acronym. Although taxes are relatively low, he expects them to rise because the following programs need to be funded.
Social Security
Healthcare
Income Tax
Pensions
Y-O-Y-O
You're On Your Own
If you don't create your own plan, you'll get the government plan.
Where do you want your money to go?
- The Nursing Home
- The Internal Revenue Service
- Children
- Grandchildren
- Charity
This is the order that 90% of estates are consumed in. This order can be changed, but you need a plan. Even a will is not enough since some things override whatever is in the will.
IRAs are like a football game.
1st Half of the Game - Accumulation
2nd Half of the Game - Distribution
The Three Biggest Benefits in the Tax Code
- Life Insurance
- Estate Tax Exemption
- "Stretch" IRA
Dramatization of a problem
Take a $10 million IRA. You die. In 9 months an estate tax kicks in. It charges $5 million. Your family takes it out of the IRA. Now the 40% income tax kicks in and your family is charged another $2 million. Your family takes it out of what's left in the IRA. But then they will be charged another 40% on the $2 million they took out which is $800,000. This process will go on every 9 months until you have no money left.
Admiration
People just love to look at their statements. But . . .
You Use It
You Leverage it
or
You Lose It
The Three Biggest Benefits in the Tax Code
Life Insurance
In the problem, Slott would have had the guy take $5 million out of the account and put it in life insurance since it comes out income tax and sometimes estate tax free. Life insurance might be expensive (and you'll have a higher income tax), but you'll benefit more than if you get into the taxation cycle explained in the dramatization.
Estate Tax Exemption
At the time of this writing, the tax code allows $2 million in exemption per person. To get the exemption, you need to leave the IRA to family other than your spouse.
Stretch IRA
You must determine who your beneficiary is so they can "stretch" that IRA throughout their lifetime by extending the lifetime of their withdrawals.
The Beneficiary Form is the single most important document to you!
It's generally a better idea to take control of your money. IRAs give you more options than a 401(k).
Exit Strategy
Most people don't have a plan to withdraw their retirement income.
SHIP
The SHIP Slott refers to is an acronym. Although taxes are relatively low, he expects them to rise because the following programs need to be funded.
Social Security
Healthcare
Income Tax
Pensions
Y-O-Y-O
You're On Your Own
If you don't create your own plan, you'll get the government plan.
Where do you want your money to go?
- The Nursing Home
- The Internal Revenue Service
- Children
- Grandchildren
- Charity
This is the order that 90% of estates are consumed in. This order can be changed, but you need a plan. Even a will is not enough since some things override whatever is in the will.
IRAs are like a football game.
1st Half of the Game - Accumulation
2nd Half of the Game - Distribution
The Three Biggest Benefits in the Tax Code
- Life Insurance
- Estate Tax Exemption
- "Stretch" IRA
Dramatization of a problem
Take a $10 million IRA. You die. In 9 months an estate tax kicks in. It charges $5 million. Your family takes it out of the IRA. Now the 40% income tax kicks in and your family is charged another $2 million. Your family takes it out of what's left in the IRA. But then they will be charged another 40% on the $2 million they took out which is $800,000. This process will go on every 9 months until you have no money left.
Admiration
People just love to look at their statements. But . . .
You Use It
You Leverage it
or
You Lose It
The Three Biggest Benefits in the Tax Code
Life Insurance
In the problem, Slott would have had the guy take $5 million out of the account and put it in life insurance since it comes out income tax and sometimes estate tax free. Life insurance might be expensive (and you'll have a higher income tax), but you'll benefit more than if you get into the taxation cycle explained in the dramatization.
Estate Tax Exemption
At the time of this writing, the tax code allows $2 million in exemption per person. To get the exemption, you need to leave the IRA to family other than your spouse.
Stretch IRA
You must determine who your beneficiary is so they can "stretch" that IRA throughout their lifetime by extending the lifetime of their withdrawals.
The Beneficiary Form is the single most important document to you!
It's generally a better idea to take control of your money. IRAs give you more options than a 401(k).
Labels: finance
posted by Tito Eddy at 11:45 AM
0 Comments:
Post a Comment
<< Home