Taxes in Distribution Explained

I think we can agree that taxes are no one’s favorite subject, but to make the most out of your hard-earned money, you need to know all the different ways that they can impact you especially in the distribution phase of your retirement. During this phase you should simply be executing on the plan you have in place, not trying to figure out the ins and outs of the tax system.

So first, let’s discuss the various kinds of taxes to take into consideration as to how they could potentially affect you.

Income Tax:
You’ve gotten deductions for this money for all these years you’ve been saving up for retirement, but now that you’re nearing retirement, where you’ll be taking that money out and you’ll have to pay income tax on it.

Capital Gains Tax:
Depending on your financial plan, you might run into capital gains tax. This is where your money has been invested in such a way that you’ve gained money from it and now those gains will be taxed accordingly

These different potential taxes that come with the distribution phase are a key part of the financial planning process and are important to consider especially when you’re thinking about retiring in the next five, ten, or fifteen years. Topics such as how much money should you have in each different type of account, what you’d like your spending to look like during retirement, and what accounts you should be taking from for each year retirement are all things that you should be regularly considering to find out which answers are the best fit for you and your goals.

These can be complex things to figure out, but you don’t have to do it alone. Having a financial professional invested in your success to talk you through every step of the process can be one more step towards complete confidence in your financial future.

Schedule a meeting with a qualified financial professional at 49 Financial today!


Listen to Travis explain more on the subject!


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