Plan Your Taxes Now, Save Money Later

Take your time with the Tax Cuts and Jobs Act's sunset clauses. Here are several strategies for taking advantage of current low tax rates.

Suppose you consider taxes an essential element in your investment selections (and you should). In that case, you may be aware that numerous significant but temporary tax incentives will expire at the end of 2025.

If you didn't know, forgot, or just put off taking action, consider this your reminder: It is critical to prepare for these changes before many of the favorable provisions enacted by the Tax Cuts and Jobs Act (TCJA) of 2017 expire.

If you haven't already, now is the time to start thinking about reducing future taxes and keeping more of your hard-earned money (especially if you're approaching or have already retired).

With that in mind, here are a few strategies worth considering:

Making Strategic Withdrawals

You may already have a plan in place to withdraw a certain amount from your savings each year in retirement to supplement other sources of income, such as Social Security and pension payments. However, you must also consider which accounts you will be withdrawing funds from and how that money will be taxed.

Moving money from a 401(k) or IRA to a Roth IRA

Moving your money to a Roth IRA may result in many tax breaks for you and your family. After holding your savings in the Roth for five years (and reaching age 59½), all withdrawals, including earnings, are tax and penalty-free, even for your heirs.

Stepping up your estate planning

If you're concerned about the declining lifetime estate tax exemption, talk to your adviser about the many strategies that can help you optimize your gifts, remove assets from your estate, and minimize your taxes later, such as life insurance or a variety of trusts.