Your 401(k) Tax Bill and the Income Plan Behind Retirement

Yeah, and opening up, and just like Kelly is covering heavily with her webinars in the fourth quarter, taxes.

Let's open up with taxes.

And, you know, a lot of people know and financial pros call it the lump sum tax time bomb.

Your 401k, money going in pre-tax, growing tax deferred.

But when you start pulling it out, well, that's when you experience the lump sum tax time bomb hit with ordinary income tax.

So we're going to look at some ways you can avoid that.

Not avoid it so much.

Minimize it.

Maybe avoid it with some strategies.

Let's look into this first thing, Kelly, about tapping into net unrealized appreciation.

Yes, and this is one of the high-level strategies I bring to the table that a lot of advisors don't talk to you about.

So I often talk that I bring high-level strategies to the table for you to consider.

This is one of them, the net unrealized accumulated appreciated company stock that you might have.

So if your company stock in your 401k is there, you might qualify for this NUA treatment, we call it.

So here's the play.

you move that company stock into a taxable brokerage account from your retirement account, you'll pay ordinary income tax only on the original cost of the stock, not the value today.

So any gains that you have will be taxed as long-term capital gains, which are typically much lower than ordinary income tax rates.

And that's a huge win for the stock as it grows.

And as you participated in that with your company, And over the years, that can really add up.

I've had a lot of clients, publicly traded companies that retire and they have company stock in their retirement accounts that they bought at a much lower price than what it is today.

So this is a way to kind of get around that, not avoid taxes completely, but certainly make them much less.

So if you have that company stock, I would say give us a call.

We'll walk you through that and maybe try and save you or minimize some taxes there.

And certainly we'll talk to you about that 800-810-8060, 800-810-8060.

You can also text the letters if you prefer to text that same number, CWA 800-810-8060.