Wealth management and tax planning: Options to explore with your financial advisor

Wealth management and tax planning go hand-in-hand. You can’t avoid taxes, but there are strategies to meet legal obligations and reduce their impact on your wealth.

By carefully managing your retirement distributions, you are more likely to reach your retirement goals. One option to lessen the impact of taxes as you prepare for retirement is Roth conversions. While it’s not the answer for everyone, it’s an option we get lots of questions about, so let’s explore the different strategies and what they involve.

Roth conversion strategies

There are many types of retirement planning accounts and products available that contribute directly to your wealth management and tax planning strategies. Talk to your financial advisor to determine what is most beneficial for your unique situation.

Some may benefit by applying Roth IRA conversion strategies to enjoy tax-free income during retirement. A Roth IRA conversion is when assets transfer from a traditional account such as a 401(k) or traditional IRA into a Roth IRA account.

There are several types of conversion strategies:

Direct rollover. Funds are directly transferred or deposited from the former account to the new account.
Trustee-to-trustee transfer. Funds are transferred between institutions.
Same-trustee transfer. Funds are transferred from one account to another within the same institution.
60-day rollover. Money is paid directly to the account holder, which they must deposit into the Roth account within 60 days.

An additional benefit to Roth conversion is there are no minimum distributions during the owner’s lifetime. You can take withdrawals only when you need them.

Building wealth often means an account owner will be in a higher tax bracket in the future. Part of wealth management and tax planning to properly manage this growth is looking at the benefit of paying income tax at the time of asset transfer instead of withdrawal. The account owner saves by paying a lower initial percentage than what may be in the future.

Wealth management and tax planning for retirement

In addition to strategies such as Roth IRA conversion, other tools may work for you to keep what you’ve saved so you can reach or exceed your retirement goals. Don’t wait until tax season to work on identifying and reducing tax liabilities.

A well-informed financial advisor will stay up-to-date on all tax rates and policy updates to anticipate any impact taxes could have on your assets. Before retirement, your advisor will help guide your strategies to maximize value and search for tax credit opportunities and increased deductions, such as charitable giving.

Good Life Asset Strategies Planning Services

Good Life Asset Strategies financial advisors are knowledgeable when it comes to wealth management and tax planning. Depending on the complexity of each individual situation, we also recommend working closely with a CPA or tax attorney. We take the time to understand each client’s particular goals and navigate complicated product options to find the best financial and retirement planning services to fit each person’s goals and retirement dreams.