CEO Today Magazine August 2018 Edition

www.ceotodaymagazine.com 24 SPECIAL FEATURES Retiring Soon? 4 Tips to Reduce Tax on Your Retirement Benefits Taxes never leave you. You have to pay them when you work and will continue paying them in retirement. Taxes in retirement are calculated on your income each year as you receive it, exactly the way it worked before you retired. Retirement and tax planning is critical to estimate the amount of taxes you would have to pay in retirement so that you can budget accordingly and set up the tax with holdings in advance. In this article, we will see how you can reduce tax post-retirement. 4 Ways to Reduce Tax After You Retire Use Tax-Advantaged Accounts Invest in different accounts as it offers you more flexibility. Roth IRA requires you to contribute after tax, thus allowing you to take earnings tax-free in retirement. Contributions to traditional IRA may be tax- deductible in the year in which they are made, but the taxman will demand his due when mandatory withdrawals begin at the age of 70½. In traditional IRA, you will be taxed at some level. It would be better if you tap the taxable assets first and leave the tax- deferred assets alone in order to manage your tax liability in a better way. You should be able to get an income from tax-free sources post-retirement. The By Rick Pendykoski Founder of Self Directed Retirement Plans LLC