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Tom Meaglia, ChFC®, AEP®,

CLU®, CRPC®, MSFS

Chartered Financial Consultant

Investment Advisor Representative

Chartered Retirement Planning Counselor

CA Insurance Lic. #0567507

 

Meaglia Financial Consulting

2105 Foothill Blvd., #B140, La Verne, CA 91750

 

Toll Free: 800-386-3700

Bus:         909-593-6105

Cell:         818-681-8600

Fax:         909-593-6120

 

Email: tom@meagliafinancialconsulting.com

Website: www.meagliafinancialconsulting.com

July/August 2022

Legacy Planning: Keep Taxes in Mind

Three male generations in green field at cattle farm. Caucasian grandfather, father and son smiling to camera and standing at stable with sheep flock. Shepherds. Old man farmer with son and grandson.

If you're nearing retirement, you may have two major planning concerns. One is determining how much income you'll need and where it will come from. The other is creating a tax-efficient plan for passing along your assets. If one of your goals is to leave a financial legacy to your family or your favorite charity, you'll want to design a strategy that takes taxes into account.


Expenses and Income
How much money will you need to live on in retirement? In addition to your current living expenses, you may need funds for unanticipated expenses, such medical or long-term care costs. Social Security, pensions and annuities are stable sources of income that you can supplement with retirement plan withdrawals, the sale of investments, and savings.


Your Accounts
Confirming that your accounts are titled appropriately and beneficiary designations are up to date can help ensure that your assets will pass to your beneficiaries as you intend and receive favorable tax treatment. Review designations periodically, especially if your intentions or tax laws change.


Your Strategy
You may be tempted to preserve the assets in a traditional IRA or qualified retirement plan account for your heirs and withdraw funds for living expenses from taxable investment accounts to take advantage of lower capital gains rates. But that strategy could leave your heirs with a large tax bill. Why? Withdrawals from a traditional IRA or qualified retirement plan account are taxed at ordinary income tax rates. However, appreciated assets, such as stocks, generally receive a step up in basis at the owner’s death, so any appreciation since you acquired the investment won’t be taxable to your heirs. (This benefit may be limited in the future.)


A Work Around
Consider converting all or a portion of the money in a traditional IRA or qualified retirement account to a Roth IRA. Make sure you have other assets to pay income taxes on the conversion.


Being Charitable
Naming a charity as the beneficiary of a qualified retirement plan account or traditional IRA allows the organization to receive the assets tax free. Your estate may also receive an estate tax deduction for the donated assets.


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Thomas Meaglia is an Investment Adviser Representative of Coppell Advisory Solutions LLC, dba, Fusion Capital Management, a registered investment adviser that only conducts business in jurisdictions where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting.
Insurance and annuity products are not sold through Fusion Capital Management. Fusion does not endorse any annuity or insurance product, nor does it guarantee any insurance or annuity performance. Annuity and life insurance guarantees are subject to the claims-paying ability of the issuing insurance company. If you withdraw money from or surrender your contract within a certain time after investing, the insurance company may assess a surrender charge. Withdrawals may be subject to tax penalties and income taxes. Persons selling annuities and other insurance products receive compensation for these transactions. These commissions are separate and distinct from Fusion's investment advisory fees.
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