Tax Strategies To Protect Your Future
- Consider an
IRA
for children with earned income.
- Determine which type of
IRA is
best for you, establish an account before the end of
the year, and make your contribution before the due
date of your tax return to obtain a current year
deduction.
- Be mindful of
distributions from your IRAs. Before age 59½,
withdrawals are generally subject to penalty. And,
once you reach age 70½, you must take required minimum distributions (RMDs). How much you must withdraw is based on your account balance and life expectancy.
- Think about the best ways to gradually transfer your estate tax-free. Consider establishing a
gifting program under which you and your spouse transfer a combined $30,000 each year to any number of recipients.
- Make sure your spouse
owns sufficient assets to take full advantage of
your potential
estate tax
exemption if he or she predeceases you. Make gifts
to your spouse that qualify for the marital deduction, if necessary.
-
Contribute
the maximum amount allowable to a tax-deferred
retirement plan, including "catch-up"
contributions if you are 50 or older.
- Create a business succession
plan. For succession planning ideas,
click here.
- Set up a
trust to meet your long-term financial goals.
- Consider your life insurance needs in light of
the estate and gift tax changes. Life insurance can
provide a valuable hedge if you die before the
estate tax unified credit increases sufficiently to
shelter your estate from taxation.