Hartford Business Journal

16 HARTFORDBUSINESS.COM | March 28, 2022 Decisions made today can make a difference tomorrow – and move you closer to achieving the lifestyle in re rement that you're striving for. The founda on for determining how to re re consists of individual choices that will define a plan based on your priori es, considering opportuni es including these: Why delay Social Security for tax purposes With the overall goal of reducing taxes over the long term, it's important to look to future years and tax events that could cause increased taxa on – and to understand how Social Security is taxed before including it in your re rement income, investment and legacy planning. A strategy we have used is delaying Social Security, u lizing income from capital gains for living expenses while conver ng Tradi onal IRAs to Roth IRAs through maximiza on of brackets or up to the limit of certain taxable thresholds for Medicare. When to unload capital gains Be purposeful when genera ng capital gains. Investors in mutual funds o en pay capital gains as the fund manager buys and sells equi es. For example, in 2008 many investors had to pay taxes on capital gains even though they had lost a significant amount of money. Be aware of income-based thresholds where the sale of equi es will generate no federal taxes. It's important for our clients to 1) be able to control when they are taxed and 2) be sure they are planning when to sell to ensure the lowest legal tax rate. Planning around deferred compensation Certain deferred compensa on plans have specific rigid payout plans. In some instances, clients have had all the money in their plan paid to them (and taxed) 9 months a er they le company. In other circumstances, clients have had to take all the money out over a 5-year period. It's important to have a plan in place for income, investment and taxa on when faced with these rigid payout structures and seek to keep as much of your hard-earned and saved money as possible. Leaving company stock in a 401(k) One of the lesser-known opportuni es in company re rement plans HOW TO RETIRE WITH FUCHS FINANCIAL LOOKING AHEAD NOW CAN MITIGATE TAXES AND MAINTAIN LIFESTYLE Investment advisory services offered through Foundations Investment Advisors, LLC ("Foundations"), an SEC registered investment adviser. The commentary on this article reflects the personal opinions, viewpoints and analyses of the author, Ben Fuchs providing such comments, and should not be regarded as a description of advisory services provided by Foundations or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment, legal or tax advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. is Net Unrealized Apprecia on (NUA). It allows an employee to pull company stock out of a 401(k) by paying income taxes on the cost basis (what they paid for the stock) instead of the present value. For example, an employee could have purchased 100 shares of company stock years ago when the value was $50/share and paid $5,000 for it. The present value could now be $5,000/share, worth $500,000. If the NUA is done correctly, the stock can be extracted from the 401(k) and taxes owed will be based on the original cost, not the current value. Properly allocating investments I o en see investment accounts allocated in a way that does not appear to be in an individual's best interest. Examples include municipal bonds and municipal bond funds in tax deferred por olios, or significant dividend and interest crea on in taxable accounts for income earners in the 30% federal bracket, or highly traded funds in non-qualified accounts. All of these scenarios represent poten al pathways for improvement – areas where changes can be made and there are opportuni es for taxes to be saved. Well-timed Roth conversions Few people we talk with believe that taxes are likely to be reduced in the near future. As individuals approach re rement, they are faced with the looming presence of Required Minimum Distribu ons. It's important to have a discussion with your financial professional regarding conversion to Roth IRAs and for that Cer fied Financial Planner to be sufficiently knowledgeable to provide guidance regarding the taxa on of investments and their recommenda ons. A proper Roth Conversion plan can save a significant amount of money in future taxes. At Fuchs Financial, we work with you to develop your own How to Re re Blueprint. It begins with a free, no-obliga on consulta on. We look forward to the conversa on. HOW TO RETIRE with Ben Fuchs Saturday 12Noon & 7PM NBC Connecticut EXCLUSIVE VIRTUAL LEARNING CENTER FREE NO-OBLIGATION CONSULTATION Offices in West Hartford & Middletown • fuchsfinancial.com • (860) 461-1709 SPONSORED CONTENT Ben Fuchs "Retirement begins with a plan."

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