Money Talks February 15th

On this issue of Money Talks…. We are continuing our talk about taxes not on just Social Security but future taxes of retirement.  There are three buckets of money:  taxable, tax-deferred and tax-free.

Taxable:

·        Income from a job

·        Rental income

·        Social Security (can be taxable depending on income amount)

·        Pension

·        Interest earned from investments

·        Capital gains

·        Required Minimum Distributions (RMD) from Traditional IRA

Both Social Security and Pensions are preset.  The amount you receive can not be changed.  The other taxable income is something worth looking at.  Depending on the situation, it is possible that it can be moved to tax-deferred bucket.

Tax-Deferred:

·        Traditional IRA

·        Traditional 401K

Any earnings your contributions produce while invested are also tax deferred.  Taxes are due upon taking a distribution.  Required Minimum Distributions (RMD) must be taken starting at age 72.  There are products that we can look at to possibly move a taxable item to a tax deferred position.

Next time we will talk about the tax free bucket.  What items are in that bucket and how we can get you there.

Until next time,

Diane