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Q&A - Asset Location Planning

Q&A - Asset Location Planning

November 07, 2016

Question:  What is the impact of taxes in retirement planning?

Answer: One of the biggest mistakes made in planning for retirement is only contributing to pretax individual retirement accounts and company sponsored retirement plans.   It is not uncommon for us to meet with a new client at retirement with a large 401k balance feeling very confident about their decision to retire.   However when they start withdrawing income to meet their needs the tax bill can really add up creating doubt about their strategy.   We recommend incorporating asset location planning into the accumulation phase of wealth building.   We allocate savings to assets on a basis of the registration and then put assets into categories of taxed now, deferred or non-taxable.  Many different asset classes and accounts are taxed in different ways.   Accumulating assets in IRA’s and employer sponsored plans are great but your retirement will be greatly enhanced if you increase your exposure to Roth IRA’s and non-qualified investments such as real estate, publicly traded stocks, master limited partnership and municipal bonds. Then you have a choice of withdrawing from different buckets potentially creating a lower effective tax bill.   If you would like an asset location review please do not hesitate to call our office at 910-239-9130.

Scott A. Winslow, ChFC is an Investment Adviser Representative with over 20 years’ experience having practiced in Wilmington area since 2001.  His practice focuses on retirement income planning, tax management, and advanced wealth management techniques.

Securities and advisory services offered through Cetera Advisors LLC, member FINRA, SIPC.

Cetera is under separate ownership from any other named entity. The information in this article is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult your legal or tax professional for specific information regarding your individual situation.