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TAX
PLANNING STRATEGIES

Addressing taxes is an essential piece in preserving your retirement plan. Tax laws can be confusing, and little mistakes lead to larger tax issues. Each year millions of people overpay in taxes without even knowing it, leading to a lower retirement income. Our financial planners offer retirement tax consulting that pays critical attention to tax liability during every step of your financial planning process and by working with your CPA, can help address tax issues now and into retirement.

Stratos Wealth Partners, Wealth Management, Financial Planner, Financial Advisors

A Tax Planning Strategy

Tax planning involves taking a pro-active approach to addressing taxes related to your investment strategy.

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While it is illegal to avoid paying taxes that you owe, there is nothing wrong with looking at your investments in advance so as to help create a strategy to mitigate your tax liability.

 

There are a number of steps you can take to address your tax obligations, many of which involve saving for retirement, childcare, and medical expenses.

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Why plan?

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Income taxes on the federal level are a fact of life, and many people also have to pay state and local taxes.

When you make an effort to plan around taxes, you can save yourself money that you would otherwise pay to the federal, state or local governments.

 

While you may not notice the impact of federal taxes, they are the biggest expense that most families incur in the course of a year.

For example, if you save for retirement, whether in the form of an employer-based program such as a traditional 401k or individual retirement account (IRA) or both, you can save money on taxes.

 

You don't get a current tax deduction for contributions to a Roth 401k or Roth IRA, however.

 

Saving in a traditional 401k or traditional IRA can reduce your taxable income when you make a contribution, but distributions are taxed.

 

While a Roth 401k and Roth IRA offers no deduction for contributions, but qualified distributions (including earnings) are not taxed.

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Olympia Wealth and Life Management and LPL Financial do not offer tax advice or services. Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax. A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.

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