From the Introduction
‘Why Would the IRS Steal Your Money?’
The answer is simple and straightforward: our government is going to need your money—and lots of other Americans’—to keep our country running.
As of March 2016, our country’s national debt totaled more than $19 trillion (and the number continues to rise by $1 million every minute!). That amounts to $154,200 of debt for each taxpayer in the United States. Yet this is a mere drop in the proverbial bucket compared to what the government will owe in benefits to Social Security and Medicare recipients far into the future, as well as in pensions to military and civilian government workers. Read the rest of this excerpt…
From Chapter One
‘Tax Alternatives to the IRA Rollover’
In the previous sections of this chapter, we talked about the benefits of rolling over your retirement account distributions to an IRA. While doing this will allow you to avoid the tax man for a while longer, you may be interested in exploring the other options that force you to pay the IRS piper up front, but could be better suited to your situation. These options include ten-year averaging, the twenty percent capital gains tax election, and ordinary income tax. Read the rest of this excerpt…
From Chapter Two
Case Study: Bob and Carolyn Whitehall, retirees
When Bob Whitehall retired from a regional bank in 1997, he’d accumulated a comfortable nest egg of $1.8 million. A third of his savings was in the common stock of his employer; the bank offered an employee stock purchase program that allowed him to invest in the stock through payroll deduction. The stock had done well over the years, paying cash and stock dividends, which Bob reinvested while he was working. After retirement, Bob began to take the dividends in cash and used them to supplement his income. Read the rest of this excerpt…
From Chapter Three
‘Roth Accounts for Younger People’
The smartest move a younger person can make is to invest in a Roth IRA. A person who starts saving $5,000 per year in a Roth IRA at age 20 will have over $1.5 million at age 60 if it grows at eight percent. Provided the person has followed the rules, he won’t owe the IRS a nickel on any of the money.
Many taxpayers, young and old, find it difficult to give up the immediate tax savings they’d receive if they chose to make a traditional IRA contribution that’s deductible. In the example above, if the same person contributed to a traditional IRA, the entire $1.5 million would be taxable. He’d have saved about $50,000 in taxes along the way but would owe over $200,000 in taxes when he tried to spend any of the money. Read the rest of this excerpt…