The Power of Tax Deferral
Let's face it, you work hard for your money, and that's why
you need your money to work hard for you. Of course, income
tax is a fact of life - and it's not something over which
you have a great deal of control. However, there is a way
to accumulate money without having to pay taxes on it - at
least not until you use it. It's called tax deferral, and
several types of insurance and financial products offer it.
WHAT IS TAX DEFERRAL?
With tax-deferred products, you don't pay taxes on accumulated
funds, interest or dividends until you actually withdraw the
money. Since the gain in a tax-deferred product isn't taxed
until it's withdrawn, it usually accumulates at a faster rate.
For this reason, tax-deferred accumulation can provide a powerful
If you participate in a 401(k) plan offered by your employer
or if you own an individual Retirement Account (IRA), you're
already enjoying the benefits of tax-deferred accumulation.
Many insurance and annuity products also offer this advantage.
THE POWER OF TAX DEFERRAL
The following chart shows the tremendous difference tax deferral
can make in the rate at which your money grows. If we assume
that a single sum of $50,000 will be invested for 30 years
at a hypothetical interest rate of 8%, we see that the tax-deferred
vehicle provides better long-term accumulation. If you are
in the 31% tax bracket, you may be able to accumulate about
$250,620 in a taxable account. However, if you used a tax-deferred
account for the same investment, you may accumulate over $503,100.
(Please note that a 10% IRS tax penalty may be imposed on
withdrawals from annuities, some insurance products, lRA's,
or 401(k) plans, when these withdrawals are made before the
purchaser has reached age 59 1/2.)
*Hypothetical rate used for illustrative
purposes only. Not intended to predict nor guarantee any actual
product results. This illustration does not reflect the effect
of Mortality and Expense charges and Administrative fees.
These fees would reduce the performance shown in the above
LET IT ACCUMULATE
Tax-deferred products offer you control over your financial
situation. Not only does your money accumulate but, if you
are selective in your withdrawals and plan them accordingly,
you can avoid getting "hit" with too many tax consequences
when you do withdraw the money. Here's why:
- Tax deferral strategies work best for long-term planning,
usually retirement planning. The idea is to leave the money
where it is for a long time - to let it go and let it grow.
Sure you'll be taxed on the money you start to withdraw
after you've retired - but you may be in a lower tax bracket
by then, which would serve to soften the tax blow
- You can be selective in your withdrawals and plan them
so that you do not suffer unnecessary tax consequences.
The tax system has "thresholds" (tax brackets)
that will help you determine how much of these funds you
can withdraw during a given year. If you are prudent with
your withdrawals - and you don't break into a higher tax
threshold - then the effect of these withdrawals on your
taxes will be minimal, Remember, you're only taxed on what
NO SURRENDER CHARGE ANNUITY
With just one product, we can choose between many different
sub-accounts managed by some of the top Investment Advisors
in the country. We can incorporate proper ASSET ALLOCATION
and all of the Dividends, Interest and Capital Gains grow
100% tax-deferred. Unlike most annuities that charge a penalty
for early withdrawal that range from 5 to 9 years, this type
of annuity has no surrender charge ever. Click below to view
the list of different Variable Annuities which we feel are
among the best available today.
Go to the Annuity
To contact us:
Tactical Wealth Advisors, LLP
8226 Village Harbor Drive
Cornelius, NC 28031