Tax Strategies for Non Retirement Accounts

#retirement planning #financial education #financial advisor

Hey what’s up everyone bill that’s been here for money evolution in today’s video i’m gonna be talking about the money that you might have saved for your retirement and what we call non retirement accounts so if you watch my last video we were talking about the traditional bucket and we’re talking about some of the future tax liability that you might have with

Having too much money in that traditional account type so in today’s video we’re going to be taking a deeper dive on that non retirement side and we’re going to be talking about some strategies as you go into retirement and some things you should be thinking about but real quick before we get into the video if you’re watching this you’re thinking hey this makes

Sense and you’d like to have us help you put together some of your plans for retirement there should be a link right below this video or you can go to wealth vision plan com it’ll take you over to a web page that’ll have some information about our wealth vision comprehensive financial plan if you’re like what you see on that page there should be a button there where

You can schedule some time to talk with me one-on-one and see if it’s something that might make sense for you okay so why are we talking about this and why is this concern for you potentially well if you have some money that’s in non retirement accounts first of all that money is never going to grow to as large of a balance as it will in one of these other two tax

Advantaged accounts because with a non retirement account you have to pay taxes on that money every single year even if you’re not spending the money and there’s a couple different types of income that you might have to pay taxes on so you might get dividends dividend income from the assets that you have in that account you also might get interest income and you

Also might get some capital gains sometimes that might be short-term capital gains sometimes that might be long-term capital gains but we’ll put capital gains here and again if you’re using the assets in that account to pay the taxes on that every year and you have to pay the taxes from somewhere then that balance will never grow to as large of an amount as it would

Is if you were able to either defer the taxes like you can with a traditional account or not pay the taxes at all or pay the taxes that you go in and have that money come out tax-free as it is in the case of the roth account so that’s the number one reason that you might want to be a little bit aware of that also to when it comes time to start taking that money out

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In retirement this is a question that we ask a lot of times when you’re doing some of our live events and we say hey you know when you go to take money out of a non return nikhyl what do you have to pay taxes on do you pay taxes on the money that you’re actually using to live off of or do you pay taxes on something else and the actuality of that is you’re actually

Going to pay taxes on whatever the gains of those dividends interest and capital gains are gonna be for the year so even if you say hey i’m gonna take ten thousand dollars out of that account it’s kind of supplement my retirement lifestyle if you had a twenty thousand dollar capital gain or you got twenty thousand dollars in dividend income you actually have to pay

Taxes on that larger amount so as it pertains to kind of creating retirement income we feel that this non retirement account is not really the best way to do that so if you have a lot of money here in the non retirement account and you’re planning for retirement are planning to use that money for retirement what we want to try to do is we want to try to shift that

Money over into one of these other areas and there’s a couple different ways that we can do that so number one and that’s why i left all of this information up here from our last video so we kind of get a framework here for how this stuff is all kind of tied together so number one is if we haven’t already we want to look at maximizing some of the accounts that we

Can contribute to so maybe it’s a 401k plan at work maybe your spouse has a 401k plan that you’re not fully maximizing so you could potentially use some of that money that you might have an on retirement accounts to increase the contribution that you’re doing to some of those plans that work and like we talked about in the last video you might want to look at you

Know where you’re contributing to that and you might have an option hopefully you do where you can put that money into a roth account or a traditional and we talked about this at extent it a big extent in some of her other videos but you know want to look at where’s my tax bracket going to be in the future versus where is that gonna be today or where is it today

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And that’s gonna kind of make that determination or help you make that to figure out where you should be saving that money so so number one is you can maximize that and also don’t forget about your ira accounts and your roth ira so even if you’ve maxed out your 401k plan you might be able to make a contribution to a roth ira if you fall within those income guidelines

If you’re over that there are still some strategies you can do kind of a backdoor strategy we’ve made an entire video all about that but but you might be able to make that contribution directly to a roth account so look at what some of those different options are the other thing that you can do too as we talked about in the last video is you can look at doing roth

Conversions and that’s something that we we talked about here because of the tax cuts in jobs act so between 2018 and 2025 for most of us we’re probably going to be in a little bit lower tax bracket than we were before the tax cuts and jobs act and probably unless they do something radical and extend that probably going to be in a lower tax bracket then what those

Are going to be in 2026 so roth conversions might be a strategy that makes sense and what we do here is we’re actually moving money from that traditional bucket over to the roth but we have some taxes that we have to pay and so if we have money in this non-retirement bucket we can use some of that money to pay the taxes okay and so what we’re doing is we’re you know

Kind of reducing some of our tax liability over here because we’re reducing the dollar amount there and we’re shifting it over into an account that is going to ultimately be tax-free for us down the road so those are a couple strategies there the roth conversion maximizing your accounts and then lastly if you still end up with some money here in the non retirement

Bucket and you want to try to minimize that what we can focus on are things that are going to give us a little bit better tax advantage so for example if we add a word to this and we say qualified dividends those for most people watching this are going to be taxed at a maximum tax rate of 15% even if your tax brackets maybe 22 or 33 percent or whatever that might

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Be so 15 percent and also if you have long-term capital gains that’s also going to be at a 15 percent tax bracket so think about the assets that you have in that non retirement account interest is going to be taxed at your ordinary income tax rate which is going to be that 22 percent or whatever your tax bracket is same thing with short-term capital gains so we

Want to try to if we’re going to do things here focus on long term capital gains and qualified dividends and try to reduce interest in short-term capital gains so one of the things and we made a video about this here recently where we talked about mutual funds versus etfs so if you have a bunch of mutual funds here in this non return that might be something that

You really want to think about maybe doing something a little bit different because with a mutual fund you don’t really have a lot of control over the type of income that you’re getting with that and sometimes if you’ve ever had a mutual fund where the fund actually went down in value for the year but you’ve still got a capital gain distribution that’s one of the

Big tax disadvantages of having mutual funds in that type of account so anyway i hope that made sense again thinking about the three different tax buckets and how you want to kind of align these things as you go into retirement i think is one of the the key components to putting together that tax strategy so anyway i hope this video has been helpful for you i hope

You got some great information and again if you’re thinking hey this makes sense and you want to have us help you put together some plans for retirement kind of put together a little bit more detail on some of these tax strategies you can go to that wealth vision plan com or click on one of the links below it’ll take you over to our web page and you can schedule

A one on one call with me and see if it’s something that might make sense for you so anyway with that have a great day and i’ll see you back in one of our next videos you

Transcribed from video
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