Traditional planning for years has been saying that you should max out the contributions to your qualified plan because you will be in a lower tax bracket when you retire. However, with the implementation of the new healthcare law you may see an increased tax on the distribution of your money at retirement.
Here is how it works: The law calls for an additional 3.8% tax on unearned income to pay for healthcare (not yours, of course!). This applies to income you receive in the form of dividends, capital gains and distributions from a qualified plan. Now, this tax is supposed to apply only to singles earning $200,000 and families earning over $250,000. Herein lies the problem: you may not be affected now, but the income is not indexed to inflation and does not take into account your future success.
As a result of this new law every dollar in your retirement count is now—and will continue to be—subject to an additional tax retroactive to the very first dollar you put in!
It may be time to implement a new strategy to eliminate or reduce this effect on your retirement income. With our help, you can create strategies to achieve your maximum financial potential and overcome this and future taxes.
Quit worrying, and plan for a Happy Retirement!