In life we’re told that there are two things that are unavoidable, death & taxes but I disagree. Now you can’t avoid death but you can stop paying taxes, you’ll most likely end up in jail. For the rest of the USA tax payers, it’s time to understand how taxes are going to destroy your life savings if they are in savings vehicles such as a government controlled or qualified account like a 401(k), 403(b), 457(b), 529, SEP, Simple, IRA.
A qualified account means that you’re qualified to pay more taxes and penalties because the government controls it.
In March of 2020 we went to war against COVID 19. The economy collapsed, businesses permanently closed, the unemployment rate rose to nearly 15% and tax revenues fell dramatically. As a result, the US National debt has risen to $28 Trillion and continues to rise at the rate of
$3.84 BILLION EVERY SINGLE DAY
This equates to a $1.4 Trillion annual increase and NOTHING is being proposed to decrease government spending.
A Democrat President with both the House & Senate having a Democrat majority means one thing that is inarguable; Government spending is going to increase. In fact, President Biden has already begun with a $1.9 Trillion relief package proposal.
Considering the fact that the highest Federal tax bracket in history was 94% and is now only 37%, there’s no doubt that tax rates are going to rise for everyone.
When you contribute money to a 401k or IRA, you postpone or defer paying taxes now so you’ll have to pay them in the future. That leaves the question, ‘Why would you postpone paying taxes now?’
1. I asked my accountant to lower my taxes this year and they said I wouldn’t have to pay tax on 401k & IRA contributions this year.
True, but did they tell that you still owe the tax? Did they tell you how much more you’ll pay later?
2. My employer or HR person told me to put money into my 401k and the company would give me free money by matching a percentage.
Did they tell you that you’ll be paying the investment costs for both you and the government? Did they tell you that as much as 85% of your Social Security will be taxed because your money is in a qualified plan? No such thing as free money.
If you believe taxes will be higher in the future and you want to retire with the same level of income that you have now, the information I teach will scare you, leave you shaking your head in dismay and asking why no one ever shared this information before.
90% of financial advisors will tell you to “Maximize your 401k contribution, up to the company match, because it’s “free money”. What they don’t tell you is that “free money” could increase your income tax 400% or more when you begin withdrawing it. Additionally, it will cost the average couple $250k of their Social Security benefits during retirement as well as increase their Medicare premiums as much as 100%
There’s a solution.
Now more than any other time in history, it’s important to learn how to invest your wealth in such a manner that it reduces or eliminates your future tax liability.
Contact me if you want to learn how to transition your wealth off the IRS radar screen so you never file a tax return in retirement.