82 • RUBY, WILDING & SWANSBURG 2017 tax cuts expire in 2025. Fro m year six on, we’ll assume Marty i s pay i ng th e IRS at a 3 2.5 pe rce nt e ffective tax r ate. Here’ s what it looks like for his $700,000 IRA in a rising tax environment: IRA Value: $700,000 | Assumed Tax Liability: 25% Years 1-5, 32.5% 6+
Pre-Tax Growth Rate: 5% Pre-Tax Growth Rate:5% Receive RMDs from Age 72 to Age 90, Per IRS Rules
Total Taxes Paid on RMDs
$299,507
Taxes Paid on Growth of Reinvested RMDs
$116,513
Taxes Paid by Heirs on Remaining IRA Value at Death (Age 90)
$208,765
TOTAL TAXES PAID
$624,785
Example shown for illustrative purposes only and are not guaranteed. That ’s a t otal of $ 624,785—on his $700,000 IRA! Rising Taxes . . . In Dollars and Cents Things weren’t look ing great for Mart y’s account even if his taxes stayed the same. As you may remember, the models showed he could pay $492,000 in taxes on his $700,000 IRA. But things are much worse if—like us— you bel ieve tax es are goi ng up i n the future . Because , i n this scenario , Mar ty would end up payi ng $624,000 i n taxes— $132,000 more th an if his taxes stayed the same.
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