Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
It's unavoidable in most cases: Taxpayers reaching the age of 70 1/2 must begin taking withdrawals on their IRA accounts. These strategies, however, show how clients who have a considerable amount of money in an IRA, but who also have enough income from other sources to live on, can delay taking distributions, according to CBS Moneywatch. One approach invests some of an IRA into a Qualified Longevity Annuity Contract. Another requires working longer for an employer that provides a 401(k). -- CBS Moneywatch
Clients who aim to retire early may save considerably on taxes. The advantages are often hidden behind the complexity of the tax code, according to The Dough Roller. Luckily, there are only two key principles that clients need to understand for an early retirement: the use of tax deferrals and relying on the more favorable tax treatments that come from investment income. -- The Dough Roller
Misunderstanding the tax treatment of annuity contracts can cost a client more than the high fees, according to MarketWatch. For example, investors who don't make tax-efficient investments with the withdrawals will likely face heftier income taxes on earnings from non-qualified annuities. Investment options include putting money into mutual stocks that produce the same amount of earnings, and holding the stocks for more than 12 months. The earnings would be taxed at a long-term capital gains rate, which is lower than the income tax rate. -- MarketWatch
Contributing to an employer-sponsored retirement plan is just one way clients can lower their tax bill, according to The Cincinnati Enquirer. They also can harvest tax losses and consider a variety of ways to make charitable donations. -- The Cincinnati Enquirer
