Get to Zero Tax – Part 2, Taxable Accounts
Mark returns with an exciting Weekly Webinar, featuring market updates, a rundown of current economic headlines, and a valuable financial planning segment to enhance your retirement readiness. He continues a four-part series on getting to zero tax, with the focus this week on taxable accounts.
Kicking off the conversation this week, Mark takes some time to discuss some current headlines. The Federal Reserve raised rates by 0.25 percent as expected, increasing them from 5.25 to 5.5 percent. They indicated that they will not solely rely on incoming data to determine further rate adjustments. Jobless claims fell by 7,000 to 221,000, signaling continued strength in the labor market. The Personal Consumption Expenditures Index fell to 3 percent year over year in June, while the Core Personal Consumption Expenditures Index rose by 4.1 percent year over year, both lower than expected but still above the two percent target. Mark mentions concerns about a potential recession and shared a report showing Medicare’s Hospital Insurance trust fund may be depleted in eight years. Currently, Medicare funding relies less on payroll taxes and more on the general fund, leading to concerns about future funding and potential tax increases.
Moving onto the Ed Slott updates, Mark delves into questions surrounding the recent IRS relief related to Required Minimum Distributions (RMDs). The IRS provided relief for specific situations: first, excusing 2023 RMDs for certain IRA and plan beneficiaries under a 10-year payout period; second, extending the rollover deadline for retirement account owners born in 1951 who mistakenly received distributions in 2023 when they were not necessary due to changes in the law. The relief applies only to certain beneficiaries under the 10-year payment rule, while eligible designated beneficiaries, including surviving spouses, minor children under 21, chronically ill or disabled individuals, and those not more than 10 years younger than the account owner, are not affected and must continue taking RMDs.
Before jumping into a conversation on taxable accounts, Mark takes some time to discuss the markets as of July 28th. The Dow Jones Industrial Average was up 0.66 percent for the year, the S&P 500 was up 20.46 percent, and the NASDAQ was up 37.43 percent year-to-date. Global indices were also up for the year. The Fed’s fund target rate was at 5.5 percent after a 0.25 percent increase. The Wall Street Journal reported lackluster earning projections, indicating that S&P 500 companies are expected to see a roughly seven percent year-over-year decline in earnings for the second quarter, the largest decline since the second quarter of 2020. Mark mentions BlackRock, a significant investment firm, as they are overweighting short-term U.S. treasuries and U.S. agency mortgage-backed securities while slightly underweighting U.S. stocks. They are currently under investigation for facilitating investments in restricted Chinese companies.
Utilizing Taxable Accounts to Achieve Zero Tax Retirement
For this week’s Financial 15, Mark builds on last week’s conversation in this new four-part series by continuing the conversation around tax-efficient retirement planning strategies, specifically focusing on taxable accounts. He mentions various investment options, including Roth IRAs and Roth conversions, as well as the challenges associated with taxable accounts, such as capital gains and taxes on dividends. Mark emphasizes the importance of minimizing tax rate risk in retirement and suggests using life insurance retirement plans as a way to transfer money from taxable accounts to a tax-free Roth-like instrument. Getting strategic with your taxable accounts helps to reduce taxation in retirement and provides a tax-free benefit for beneficiaries in case of passing away without using the long-term care benefit. Mark also touches on long-term care planning and its associated costs.
This is an episode you don’t want to miss, especially if you’re looking to get strategic with your taxable accounts. Tune in now to learn more!
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Attleboro Wealth Management, LLC is a Registered Investment Adviser. This program is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Attleboro Wealth Management, LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Attleboro Wealth Management, LLC unless a client service agreement is in place.