Moves Beyond Today’s Money SECURE STEPS TO A SAFE RETIREMENT
There’s often more to retirement planning than meets the eye, especially regarding taxes.
to provide to your heirs. However, prepare for the likelihood that putting too much money into a Roth conversion may lead you toward a higher tax bracket once retirement comes, so careful planning with professional assistance is advised. With taxes expected to rise in 2026 and beyond, it’s also prudent to work with a financial planner to implement strategies to reduce your financial obligations in retirement, including the amount taxed on your Social Security benefits. A Plan for Health Care Hurdles Unfortunately, reaching retirement age often means experiencing new health issues that could substantially impact your income. It is critical to consider how any changes to your retirement income may affect Medicare premiums or increase the chance of incurring penalties. Charting a financially secure future takes skill, focus, and tremendous care. What may work for someone else financially may not be the best solution for you. Consult a financial professional before implementing any plan that could drastically alter your comfort and security.
Although many people believe saving money for their golden years is the primary path to a secure retirement, tax planning and health care considerations play significant roles in the strength of one’s later years and subsequent legacy. Here are two essential aspects of proper retirement and estate planning that many often overlook. The Right Financial Tune-Up Time Frame The most significant risk to successful estate and retirement planning is not starting the process early enough. To ensure the smoothest transition possible, experts recommend engaging in tax planning no later than five years before you intend to retire. Getting a lengthy head start will enable you to determine ways to make pretax funds work for you in tax-advantaged accounts. If you anticipate reaching a higher tax bracket in retirement, converting to a Roth IRA — in which you can grow post-tax funds toward your retirement and withdraw them tax-free after you reach 59.5 years old and have had the account for five years — may be a viable option to protect yourself and what you intend
MAXIMIZED MARITAL MAGIC The Art of Unlimited Deductions
Devising the best estate plan to provide for those dearest to you can be emotionally and logistically challenging, even under the clearest circumstances. However, this process can be even more difficult due to the critical terms, conditions, and laws that could determine the strength or weakness of how your wishes are carried out upon your passing. To make things a little easier, here are the basics about the “unlimited marital deduction” and how it influences what one spouse receives from another. Tax-Free Transfers The unlimited marital deduction enables a spouse to transfer unlimited assets to another tax-free. You derive this deduction by subtracting the total amount of assets from the gross estate, which must be distributed according to a will. Estate taxes on transferred assets are delayed until the recipient spouse’s death. The spouses must be legally married U.S. citizens to qualify for this deduction. Safeguarding a Sustained Legacy If an individual wishes to have a say in what happens to their assets after their surviving spouse passes, they can set up an irrevocable Qualified Terminable Interest Property (QTIP) Trust that will still provide for the surviving spouse but outline beneficiaries
upon their death. Because this trust is irrevocable, it can’t be altered by anyone, including the surviving spouse.
Citizenship Exceptions Although establishing the unlimited marital deduction is straightforward for
American citizens, pursuing similar options for non-citizen spouses is more complex but not impossible. First, a U.S. citizen can gift money to their non-U.S. citizen spouse. In 2024, the maximum amount not subject to gift taxes was $185,000. Another option would be to establish a Qualified Domestic Trust (QDOT), which allows the non-citizen spouse to take advantage of the unlimited marital deduction so long as they are the sole beneficiary and at least one trustee is a U.S. citizen or an American corporation. Naturally, the conditions outlined in this brief overview are subject to a host of what-ifs that may affect the specific outcome of your situation. Working with skilled financial planners familiar with these nuances is essential to secure your spouse’s well-being and satisfy tax obligations when the time comes to implement your estate plan.
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