A successful wealth plan is incomplete without a well-developed income tax plan. A full understanding of important tax issues is essential to minimize the impact of income taxes that may result from financial planning. Maximizing after-tax wealth is the best way to achieve your long-term financial goals and income tax minimization is the common thread that runs through all aspects of financial planning.
For example, the math proves out that the tax-advantaged compounding of wealth inside an IRA or qualified plan trumps investment wealth produced in a regular investment account over the same time period. However, the taxation of IRA/plan distributions can make retirement accounts a tricky income tax planning challenge. The taxation of long-term disability benefits can flip a good risk management plan into jeopardy. Finally, life insurance can generate a significant pool of permanent tax-free wealth in the form of cash value – a super Roth IRA!
For business owners, there is no shortage of tax planning opportunities to generate tax savings for their family and employees. The form of business – sole proprietor, Sub S corp, LLC, etc. – can impact the degree of income tax planning available to the business owner. The bottom line is that income tax planning is an important consideration regarding which organization structure is right for your business.
Our experience affirms that smart tax planning can significantly increase the success probability of your Wealthcare plan. While we understand wealth management taxation issues, we collaborate with qualified tax professionals to ensure that we have considered all viable tax planning alternatives to maximize our client’s after-tax wealth.
