As someone who has worked hard throughout their career, you want to be able to see the fruits of your labor when you retire. Do you have plans to purchase a boat and sail across the Atlantic or put funds toward your grandchild's college fund? What you do with your acquired funds is entirely up to you, but if you wish to pay the least amount of taxes on your income, you'll require the assistance of a seasoned estate planning lawyer who can help you build the value of you IRA as well as preserve the assets for your beneficiaries.
What is an IRA?
There are numerous tax planning tools to utilize, but the most efficient mean of managing and protecting funds as you age is through an individual retirement account or IRA. An IRA is an account that an individual can set up through a financial institution that allows them to save for retirement in a tax-deferred manner.
Many question the purpose of an IRA when they already have employer-sponsored savings plans like a 401(k). While this may be helpful, research shows that individuals will need between 70% - 80% of their preretirement income after retirement to maintain the same lifestyle. Therefore, there's a high possibility that your 401(k) savings alone may not suffice. With an IRA you can supplement your current savings, access a wider range of investment choices, and benefit from potential tax-free growth.
IRAs to Choose From in Wisconsin
There are different types of IRAs to choose from: Traditional IRA vs. Roth IRA. The IRA that you select should ultimately reflect your tax planning preferences. With the help of a Milwaukee estate planning lawyer, you can discover the specifics of each and how each will be taxed to you beneficiary. Here is a brief overview:
- Traditional IRA: You deposit funds that you may deduct on your tax return and all earnings grow tax-deferred until withdrawal. Individuals are often in a lower tax bracket when they retire which could make this option favorable.
- Roth IRA: You deposit money that has already been taxed. Contributions are allowed to grow tax-free and also allow a tax-free withdrawal as long as certain conditions are met.
- Rollover IRA: You deposit funds rolled over from another qualified retirement account like a 401(k) or 403(b) into an IRA.
By contributing as much as possible to your IRA annually, you can experience the most savings. It is, however, essential that you monitor your account and make adjustments as needed. If your financial needs or overall goals for your IRA change you should be prompt in making the necessary alterations.
Each type of IRA also has specific conditions that must be met for you to fully experience the benefits of having that account. A knowledge estate planning attorney can speak in-depth about your retirement saving options, tax issues, and how IRA assets can be passed to beneficiaries using provisions in a revocable living trust.
How a Milwaukee Estate Planning Lawyer Can Help
The time to start planning for retirement is now, and without the necessary legal guidance, you may find yourself making regrettable financial decisions that can have a lasting impact. The Milwaukee estate planning lawyers at Heritage Law Office of Wisconsin are seasoned attorneys dedicated to the well-being of their clients.
We understand that each client has specific desires which is why we take the time to sit down with you one-on-one and address your concerns. Planning for retirement may seem overwhelming, but with the right legal help, you can avoid the stress of independent planning. Contact us today at (414) 253-8500 for a free case evaluation.