Tax Free Retirement Income Strategies

With the likelihood of higher Federal Tax brackets in the future, it is more important than ever to have source of Tax Free income in your portfolio.

Tax Free Municipal Bonds

Tax Free Municipal Bonds are one solution. These are either individual Bonds, Mutual  Funds or Unit Investment Trusts (UITs)  made up of multiple municipal bonds where the Income is non-taxable.  

Roth IRA accounts

As noted on our Retirement Page, Roth IRAs can be a great solution.  In most cases though you have to have the account in place for five (5) years, before turning age 59 ½ before you can access these funds.  For 2022 the maximum contribution for those under 50 is $6000, and for those over 50, it is $7000.oo Also, if you participate in a retirement plan thru your employer or your household income is over $214,000, you may not be able to contribute to a Roth IRA.

“Back Door Roth” IRA 

This is a strategy that under new tax proposals may go away in 2031. Here is how it works.  An individual has money in either a Traditional IRA or Traditional 401K.  If in a Traditional IRA, you just tell your IRA custodian that you wish to “convert” some or all of you balance to a “Roth” IRA.  You will be responsible for paying the taxes on the amount you “converted” when you file your taxes by April of the next year. It is a good idea to consult with your accountant or CPA to make sure that the amount that you convert does not push you into a higher Federal Tax Bracket.

There are some special investment options designed to help minimize the taxes due on your Back Door Roth Conversion. If you would like to know more about these, please give our office a call at (804) 741-4972

Fixed Income Universal Life (FIUL)

Many people have failed to consider how a properly designed FIUL can be a powerful addition to their Tax Free Retirement income portfolio.  There are a special sub-set of policies designed to have the potential for double-digit rates of return thru investments in various well known stock market indices. Key features of these income geared insurance policies include, penalty free pre-59 ½ withdrawals, no 1099s, NO INCOME LIMITATIONS to contribute, NO CONTRIBUTION LIMITS, no exclusion if you have an IRA or employer sponsored retirement plan, no downside loss due to stock market declines and TAX FREE Distributions.  If you would like to see how an FIUL might benefit you, please give our office a call at (804) 741-4972

Serving clients in Amelia county, Chesterfield County, Goochland County, Hanover County, Henrico County, Louisa County, New Kent County, Powhatan County, Ashland, Charlottesville, Mechanicsville, City of Richmond, City of Petersburg, Colonial Heights, Newport News, Tappahannock, James City County, Williamsburg and more..