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A Tax Trap That Catches Many By Surprise

Tax planning through retirement is important; and failing to do it through all four stages of retirement can prove costly because some of the tax traps are permanent. Here’s an example:
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Bill is single and retired with a taxable income of $46,138, which puts him right in the middle of the 22% tax bracket.  His income includes $38,000 from his IRA plus $37,500 from Social Security.  He decides he’d like to take a trip and withdraws an additional $1,000 from his IRA. 

How much will Bill owe in federal taxes on that extra $1,000?  You’d think it would be $220 since he’s in the 22% tax bracket, right? 

Nope.  Bill will owe $407 in tax – a 40.7% federal tax rate – on that income.

What?

Why? That’s just one tax trap.  There are a few others, but it’s just one example of why it’s important to do tax planning through all four stages of retirement. And, it’s important to do your homework.

I’ve created an on-demand video that will take you through it.  So, grab some coffee and get ready to arm yourself with some information that could save you tens of thousands of dollars. You can see it here.

Enjoy!

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Jim Lorenzen
Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and an ACCREDITED INVESTMENT FIDUCIARY® serving private clients’ wealth management needs since 1991. Jim is Founding Principal of The Independent Financial Group, a Registered Investment Advisor providing wealth management, retirement planning and investment advisory services. Jim's background includes founding, building, and selling five successful businesses and international consulting. He has been headline speaker at more than 500 national and international association and corporate conventions for clients such as Foster Grant, Hobie Cat, CapCities/ABC, H.R. Textron, Hearst Corporation, The National Management Association, the National Newspaper Association, and Cox Communications and has been featured on American Airlines' Sky Radio heard on more than 19,000 flights, as well as in The Wall Street Journal’s SmartMoney magazine, The Profit Sharing Council of America’s Insights; also published in the Journal of Compensation and Benefits, NASDAQ, and in scores of national and international association trade publications.
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Jim Lorenzen, CFP®, AIF®

Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® in his 21st year of private practice as Founding Principal of The Independent Financial Group, a fee-based registered investment advisor. He is also licensed for insurance as an independent agent under California license 0C00742.  IFG helps specializes in crafting wealth design strategies around life goals by using a proven planning process coupled with a cost-conscious objective and non-conflicted risk management philosophy.

Opinions expressed are those of the author.  The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.

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Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® in his 21st year of private practice as Founding Principal of The Independent Financial Group, a fee-based registered investment advisor. He is also licensed for insurance as an independent agent under California license 0C00742.
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