logging in or signing up TEI Seminar Recorded voice PMcNally Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINT lite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: (To copy code, click on the text box) Embed: URL: Thumbnail: WordPress Embed Customize Embed The presentation is successfully added In Your Favorites. Views: 42 Category: Education License: All Rights Reserved Like it (0) Dislike it (0) Added: January 18, 2011 This Presentation is Public Favorites: 0 Presentation Description No description available. Comments Posting comment... Premium member Presentation Transcript McNally Wealth Management : McNally Wealth Management Registered Investment Advisor Educating the World. One Investor at a Time. Tax, Estate and Investment Fundamentals : Tax, Estate and Investment Fundamentals Slide 3: Taxes Slide 4: “The hardest thing in the world to understand is the income tax.” – Albert Einstein, physicist Tax quotes courtesy of www.irs.gov Who Pays Taxes? : Who Pays Taxes? The Top 25% of Taxpayers pay 86% of all Federal income taxes The top 25% are households with adjusted gross incomes of $66,532 or more Source: www.ntu.com, Retrieved August 4, 2008 Tax Laws Change Constantly : Tax Laws Change Constantly American Recovery and Reinvestment Act of 2009 $282 billion in tax credits and incentives and more than $500 billion in government spending to help stimulate the economy. Tax Increase Prevention and Reconciliation Act of 2005 Extended Lower tax rates for capital gains and qualified dividends through 2010. Jobs and Growth Tax Relief Reconciliation Act of 2003 Accelerated tax cuts from 2001 tax law; reduced dividend and capital gains taxes. Economic Growth and Tax Relief Reconciliation Act of 2001 Instituted across-the-board tax cuts and gradual phase-out of the federal estate tax. Taxpayer Relief Act of 1997 Created Roth IRA and child tax credit; reduced the long-term capital gains tax. Opportunities : Opportunities American Recovery and Reinvestment Act of 2009 Making work pay tax credit (2009 and 2010) First-time homebuyer credit ($8,000) For principal residence purchased in 2009 Sales tax deduction on new vehicle purchases in 2009 Enhanced higher-education tax credits in 2009 and 2010 Temporarily replaces HOPE credit with American Opportunity education tax credit Temporary suspension of taxation of unemployment benefits On first $2,400 of benefits in 2009 Energy Efficiency and renewable Energy Incentives Health Coverage Tax Credit Increase from 65% to 80% of qualified health insurance premiums; more people eligible Source: http://www.irs.gov, Retrieved August 4, 2009 Deadlines : Deadlines Provisions Scheduled to Expire on December 31, 2010 Capital gains rate reduction Dividend rate reduction AMT exemption Income tax-rate reduction Child tax credit Marriage penalty relief Source: www.irs.gov, Retrieved August 4, 2009 Take charge of your 1040 : Take charge of your 1040 TAX SMART Tip #1: Know how the tax code changes : TAX SMART Tip #1: Know how the tax code changes 3 Keys to Manage your 1040 : 3 Keys to Manage your 1040 1. How Income Taxes Work 2. Tax-favored Investing and Saving 3. Tax Planning Opportunities Determining Taxes : Gross Income - Adjustments Adjusted Gross Income - Deductions - Exemptions Taxable Income Determining Taxes Determining Taxes : Taxable Income Tax Liability - Credits - Taxes already paid Taxes owed Determining Taxes Take charge of your 1040 : Take charge of your 1040 Marginal Tax Rates : Marginal Tax Rates Source: www.irs.gov, Retrieved August 4, 2009 Income Income For 2009 Tax year Exemption Phase-out : Exemption Phase-out AGI Begin Phase-out: $250,200 AGI Maximum Phase-out: $372,700 Single Married Filing Jointly 2009 Tax year Source: www.irs.gov, Retrieved August 4, 2009 Reduced Benefit from Itemized Deductions : Reduced Benefit from Itemized Deductions Single and Married Filing Jointly Subtract 3% excess from itemized deductions (maximum 80% reduction) TAX SMART Tip #2: Be aware of unique deductions : TAX SMART Tip #2: Be aware of unique deductions Slide 19: Taxable Income Deductions Maximize Minimize Slide 20: “Next to being shot at and missed, nothing is really quite as satisfying as an income tax refund.” – F.J. Raymond, humorist Tax quotes courtesy of www.irs.gov TAX SMART Tip #3: Consider “bunching” your deductions : TAX SMART Tip #3: Consider “bunching” your deductions Capital Gains & Dividends : Capital Gains & Dividends Capital Gains Dividends * Reduced rates effective through 2010 ** Reduced rates is effective through 2010 for qualified corporate dividends Source: www.irs.gov, Retrieved August 4, 2009 TAX SMART Tip #4: Take advantage of 0% capital gains : TAX SMART Tip #4: Take advantage of 0% capital gains This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel Alternative Minimum Tax (AMT) : Alternative Minimum Tax (AMT) 1970 1995 2000 2008 20,000 630,000 1.6 million 3.8 million 200,000 1990 Source: www.taxpolicycenter.org, Retrieved August 4, 2009 Number of tax returns subject to AMT (1970 – 2008) This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel Taxes on Social Security Benefits : Taxes on Social Security Benefits Income Thresholds Source: IRS Publication 915, www.irs.gov, Retrieved August 4, 2009 TAX SMART Tip #5: Look at strategies to avoid paying tax on money you aren’t spending! : TAX SMART Tip #5: Look at strategies to avoid paying tax on money you aren’t spending! Case Study : Case Study Original Hypothetical Case Study : Case Study Original Hypothetical Early withdrawals may be subject to a surrender charge. In addition, distributions prior to age 59 ½ may be subject to a 10% penalty. What do your taxes say about you? : What do your taxes say about you? Schedule A & B 3 Keys to Manage your 1040 : 3 Keys to Manage your 1040 1. How Income Taxes Work 2. Tax-favored Investing and Saving 3. Tax Planning Opportunities Tools to help manage your 1040 : Tools to help manage your 1040 Early withdrawals may be subject to a surrender charge. In addition, distributions prior to age 59 ½ may be subject to a 10% penalty. Tools to help manage your 1040 : Tools to help manage your 1040 Municipal Bonds The bond is backed by agencies of the US Government. The guarantee applies only to the timely payment of principal and interest. The market value of the security will fluctuate with changes in market conditions, and you may receive more or less than originally invested upon redemption or sale. TAX SMART Tip #6: Deduct CD interest penalties : TAX SMART Tip #6: Deduct CD interest penalties Tools to help manage your 1040 : Tools to help manage your 1040 Municipal Bonds Tax-exempt money market funds Roth IRA The bond is backed by agencies of the US Government. The guarantee applies only to the timely payment of principal and interest. The market value of the security will fluctuate with changes in market conditions, and you may receive more or less than originally invested upon redemption or sale. TAX SMART Tip #7: Consider a Roth IRA : TAX SMART Tip #7: Consider a Roth IRA Tools to help manage your 1040 : Tools to help manage your 1040 Traditional IRA Early withdrawals may be subject to a surrender charge. In addition, distributions prior to age 59 ½ may be subject to a 10% penalty. Some IRA’s have contribution limitations. TAX SMART Tip #8: IRA Strategic Withdrawal : TAX SMART Tip #8: IRA Strategic Withdrawal Early withdrawals may be subject to a surrender charge. In addition, distributions prior to age 59 ½ may be subject to a 10% penalty. This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel. Tools to help manage your 1040 : Tools to help manage your 1040 Traditional IRA Employer-sponsored Retirement Plans Annuities* *Early withdrawals may be subject to a surrender charge. In addition, distributions prior to age 59 ½ may be subject to a 10% penalty. This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel. Slide 39: Offset investment gains with losses TAX SMART Tip #9: Take advantage of “like” investments : TAX SMART Tip #9: Take advantage of “like” investments This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel Other Strategies to Consider : Other Strategies to Consider Tax free exchanges US Treasuries Put capital losses to good use Determine which shares to sell first This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel Tools to help manage your 1040 : Tools to help manage your 1040 IRS Section 42 investing This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel 3 Keys to Manage your 1040 : 3 Keys to Manage your 1040 1. How Income Taxes Work 2. Tax-favored Investing and Saving 3. Tax Planning Opportunities Charitable Contributions : Tax Deduction Lowers Cost of Charitable Donation This hypothetical example is used for illustration purposes only. Actual results may vary Charitable Contributions Source: Publication 526 and 561 of www.irs.gov TAX SMART Tip #10: Consider charitable donations : TAX SMART Tip #10: Consider charitable donations This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel Source: Publication 526 and 561 of www.irs.gov Slide 46: “I’m proud to pay taxes in the United States, the only thing is, I could be just as proud for half the money” - Arthur Godfrey, entertainer © 2008, 300 Financial Tax quotes courtesy of www.irs.gov Reducing your Tax Risk : Reducing your Tax Risk Minimize taxable income in retirement Maintain maximum deductions Make decisions that qualify you for 0% capital gains Use tax harvesting to your advantage Minimize taxes on social security Generate Tax Free Income For specific professional assistance, the services of the appropriate professional, such as CPA, should be sought. Don’t pay tax on money you aren’t spending : Don’t pay tax on money you aren’t spending Slide 49: SIMPLIFIED 1040 Latest Revision for: 2008 1040 Department of the Treasury - Internal Revenue Service Your Social Security Number Part 1 Income XXX-XX-XXXX FEDERAL INCOME TAX FORM 2. Send it in 1. How much money did you make last year? This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel © 2008, 300 Financial Slide 50: Taxes Estate Estates of Famous People… (but not smart) : Estates of Famous People… (but not smart) Marilyn Monroe $819,176 $370,426 Elvis Presley $10,165,434 $2,790,799 Gross to Estate Net to Heirs Source: The Cornerstones of Estate Planning Tools & Practice, ING. Retrieved September 3, 2009, www.bsibroker.com Slide 52: J.P. Morgan $17,121,482 $5,227,791 John Rockefeller, Sr. $26,905,182 $9,780,194 Gross to Estate Net to Heirs Estates of “super smart” people… (or were they)? Source: The Cornerstones of Estate Planning Tools & Practice, ING. Retrieved September 3, 2009, www.bsibroker.com 3 objectives of Estate Planning : 3 objectives of Estate Planning To help Protect you in the event of accident or illness To help Preserve your assets so that they can be transferred in a timely and tax-efficient way To help Protect your loved ones This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel Don’t take anything for granted : Don’t take anything for granted Slide 55: “Another good thing about being poor is that when you are seventy your children will not have declared you legally insane in order to gain control of your estate.” - Woody Allen Famous quotes courtesy of www.newretirement.com Assets can be transferred in a variety of ways : Assets can be transferred in a variety of ways JTWROS Beneficiary Trust Will/Probate Revocable Living Trust (RLT) : Revocable Living Trust (RLT) One vehicle that helps make sure your assets pass efficiently How it Works : How it Works Grantor: outlines “who gets what” Trustee: owns and/or manages the assets Beneficiary: uses or receives the assets in the trust Source: American Bar Association, www.abanet.org. Retrieved August 20,2009 Revocable Living Trust : Successor Beneficiaries are generally selected…usually the children Successor Trustee or Trustees are selected… Instructions are placed within the Revocable Living Trust to tell the Successor Trustee how assets are to be managed and distributed. Revocable Living Trust Case Study : Case Study Case Study : Case Study This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel Why is this easier? : Why is this easier? In many cases It is Faster It is Cheaper Allows the parents to make sure that things get handled the way they want Slide 63: This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel Is a minor Is from a second marriage Is part of a blended family Has a special need Not good with money May get a divorce Holding Trust : Holding Trust Customized to you and your circumstances and wishes Saves you money in Federal Estate Taxes In certain cases, the distribution of assets to a beneficiary needs to be delayed or even avoided This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel Case Study : Case Study Transfer of assets at death, subject to Federal Estate Taxes (FET) Determined by net value Everyone receives a Federal Estate Tax credit All assets over the credit amount are taxed at 45% Transfers made between married couples are exempt from FET (unlimited marital deduction) Source: Publication 950 of www.irs.gov Husband/Wife Joint Estate : Husband/Wife Joint Estate No FET Due* *Based on 2009 Tax Rates This hypothetical example is used for illustrative purposes only, actual results may vary PAM Trust : PAM Trust Protection for Surviving Spouse Beneficiaries Divorce Creditor Asset Appreciation Eliminate or minimize Estate taxes Specific to: Retirement accounts QIC Trust This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel Legal Documents that may help Protect you while you are alive : Legal Documents that may help Protect you while you are alive POA (Power of Attorney) Access to money when you need it MPOA (Medical Power of Attorney) Electronically Filed? Quality of Life Directive Instructions to loved ones This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel 4 Key Legal Documents : 4 Key Legal Documents Revocable Living Trust Power of Attorney Medical Power of Attorney Will Coordinate Legal with Tax Planning : Coordinate Legal with Tax Planning One thing in common What should happen with your assets if you are in an accident or pass away Make sure that you are coordinating your legal and estate planning Make sure your plan is complete! Slide 71: Taxes Estate Investing Slide 72: Cohesive Strategy Slide 73: Financial Architect This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel Slide 74: Full Disclosure Protect your Retirement : Protect your Retirement Taxes Inflation Market Losses Slide 76: “When a man retires, his wife gets twice the husband but only half the income.” - Chi Chi Rodriguez Famous quotes courtesy of www.newretirement.com TREE Plan : TREE Plan These examples are hypothetical only and do not represent the actual performance of any particular investments. Investments in securities do not offer a fixed rate of return. Principal, yield and/or share price will fluctuate with changes in market conditions and, when sold or redeemed, you may receive more or less than originally invested. The account balances could potentially be reduced by fees, expenses, and any applicable charges including taxes based on the savings/investment vehicle selected to fund the strategy. Slide 78: These examples are hypothetical only and do not represent the actual performance of any particular investments. Investments in securities do not offer a fixed rate of return. Principal, yield and/or share price will fluctuate with changes in market conditions and, when sold or redeemed, you may receive more or less than originally invested. The account balances could potentially be reduced by fees, expenses, and any applicable charges including taxes based on the savings/investment vehicle selected to fund the strategy. Income Planning vs. Spending : Income Planning vs. Spending Potential Benefits Segment by time; providing flexibility Reduce your fees Reduce Taxes Focus Assets Slide 80: “The question isn't at what age I want to retire, it's at what income.” - George Foreman Famous quotes courtesy of www.newretirement.com Customize a plan specific to you : Customize a plan specific to you Slide 82: Taxes Understand how taxes work Practice tax favored investing and saving Utilize tax planning opportunities Slide 83: Estate Planning Don’t assume the defaults are best for you or your family Have documents in place to protect you and your family Slide 84: Investing Coordinate and customize Consider segmenting Slide 85: Taxes Estate Investing US This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel It’s a lot to think about………. : It’s a lot to think about………. Where do you go from here? : Where do you go from here? Slide 88: Next Step… Only 2 Choices Stay where you are… hope everything is okay. Or 2) Get a second opinion and make sure everything is okay. Request a FREE copy of our special report “Managing Income in Retirement” 530-377-5180 patrick@mcnallywealth.com www.mcnallywealth.com Slide 89: Disclosure McNally Patrick Daniel CRD #154642 is a Registered Investment Advisor in the State of CA, Dba McNally Wealth Management 6590 Lockheed Dr. Redding, CA 96002 (530) 377-5180 This seminar/webinar is for information only and is not an offer to sell or invest in securities. Please refer to all appropriate prospectuses prior to any investment. Investments can, and do, lose money. This seminar is designed to provide accurate and authoritative information on the topics covered. However, it is not intended to provide specific legal, tax, or other professional advice. The strategies promoted in this seminar can neither guarantee a profit nor prevent against a loss. For specific professional assistance, the services of the appropriate professional should be sought. You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.
TEI Seminar Recorded voice PMcNally Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINT lite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: (To copy code, click on the text box) Embed: URL: Thumbnail: WordPress Embed Customize Embed The presentation is successfully added In Your Favorites. Views: 42 Category: Education License: All Rights Reserved Like it (0) Dislike it (0) Added: January 18, 2011 This Presentation is Public Favorites: 0 Presentation Description No description available. Comments Posting comment... Premium member Presentation Transcript McNally Wealth Management : McNally Wealth Management Registered Investment Advisor Educating the World. One Investor at a Time. Tax, Estate and Investment Fundamentals : Tax, Estate and Investment Fundamentals Slide 3: Taxes Slide 4: “The hardest thing in the world to understand is the income tax.” – Albert Einstein, physicist Tax quotes courtesy of www.irs.gov Who Pays Taxes? : Who Pays Taxes? The Top 25% of Taxpayers pay 86% of all Federal income taxes The top 25% are households with adjusted gross incomes of $66,532 or more Source: www.ntu.com, Retrieved August 4, 2008 Tax Laws Change Constantly : Tax Laws Change Constantly American Recovery and Reinvestment Act of 2009 $282 billion in tax credits and incentives and more than $500 billion in government spending to help stimulate the economy. Tax Increase Prevention and Reconciliation Act of 2005 Extended Lower tax rates for capital gains and qualified dividends through 2010. Jobs and Growth Tax Relief Reconciliation Act of 2003 Accelerated tax cuts from 2001 tax law; reduced dividend and capital gains taxes. Economic Growth and Tax Relief Reconciliation Act of 2001 Instituted across-the-board tax cuts and gradual phase-out of the federal estate tax. Taxpayer Relief Act of 1997 Created Roth IRA and child tax credit; reduced the long-term capital gains tax. Opportunities : Opportunities American Recovery and Reinvestment Act of 2009 Making work pay tax credit (2009 and 2010) First-time homebuyer credit ($8,000) For principal residence purchased in 2009 Sales tax deduction on new vehicle purchases in 2009 Enhanced higher-education tax credits in 2009 and 2010 Temporarily replaces HOPE credit with American Opportunity education tax credit Temporary suspension of taxation of unemployment benefits On first $2,400 of benefits in 2009 Energy Efficiency and renewable Energy Incentives Health Coverage Tax Credit Increase from 65% to 80% of qualified health insurance premiums; more people eligible Source: http://www.irs.gov, Retrieved August 4, 2009 Deadlines : Deadlines Provisions Scheduled to Expire on December 31, 2010 Capital gains rate reduction Dividend rate reduction AMT exemption Income tax-rate reduction Child tax credit Marriage penalty relief Source: www.irs.gov, Retrieved August 4, 2009 Take charge of your 1040 : Take charge of your 1040 TAX SMART Tip #1: Know how the tax code changes : TAX SMART Tip #1: Know how the tax code changes 3 Keys to Manage your 1040 : 3 Keys to Manage your 1040 1. How Income Taxes Work 2. Tax-favored Investing and Saving 3. Tax Planning Opportunities Determining Taxes : Gross Income - Adjustments Adjusted Gross Income - Deductions - Exemptions Taxable Income Determining Taxes Determining Taxes : Taxable Income Tax Liability - Credits - Taxes already paid Taxes owed Determining Taxes Take charge of your 1040 : Take charge of your 1040 Marginal Tax Rates : Marginal Tax Rates Source: www.irs.gov, Retrieved August 4, 2009 Income Income For 2009 Tax year Exemption Phase-out : Exemption Phase-out AGI Begin Phase-out: $250,200 AGI Maximum Phase-out: $372,700 Single Married Filing Jointly 2009 Tax year Source: www.irs.gov, Retrieved August 4, 2009 Reduced Benefit from Itemized Deductions : Reduced Benefit from Itemized Deductions Single and Married Filing Jointly Subtract 3% excess from itemized deductions (maximum 80% reduction) TAX SMART Tip #2: Be aware of unique deductions : TAX SMART Tip #2: Be aware of unique deductions Slide 19: Taxable Income Deductions Maximize Minimize Slide 20: “Next to being shot at and missed, nothing is really quite as satisfying as an income tax refund.” – F.J. Raymond, humorist Tax quotes courtesy of www.irs.gov TAX SMART Tip #3: Consider “bunching” your deductions : TAX SMART Tip #3: Consider “bunching” your deductions Capital Gains & Dividends : Capital Gains & Dividends Capital Gains Dividends * Reduced rates effective through 2010 ** Reduced rates is effective through 2010 for qualified corporate dividends Source: www.irs.gov, Retrieved August 4, 2009 TAX SMART Tip #4: Take advantage of 0% capital gains : TAX SMART Tip #4: Take advantage of 0% capital gains This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel Alternative Minimum Tax (AMT) : Alternative Minimum Tax (AMT) 1970 1995 2000 2008 20,000 630,000 1.6 million 3.8 million 200,000 1990 Source: www.taxpolicycenter.org, Retrieved August 4, 2009 Number of tax returns subject to AMT (1970 – 2008) This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel Taxes on Social Security Benefits : Taxes on Social Security Benefits Income Thresholds Source: IRS Publication 915, www.irs.gov, Retrieved August 4, 2009 TAX SMART Tip #5: Look at strategies to avoid paying tax on money you aren’t spending! : TAX SMART Tip #5: Look at strategies to avoid paying tax on money you aren’t spending! Case Study : Case Study Original Hypothetical Case Study : Case Study Original Hypothetical Early withdrawals may be subject to a surrender charge. In addition, distributions prior to age 59 ½ may be subject to a 10% penalty. What do your taxes say about you? : What do your taxes say about you? Schedule A & B 3 Keys to Manage your 1040 : 3 Keys to Manage your 1040 1. How Income Taxes Work 2. Tax-favored Investing and Saving 3. Tax Planning Opportunities Tools to help manage your 1040 : Tools to help manage your 1040 Early withdrawals may be subject to a surrender charge. In addition, distributions prior to age 59 ½ may be subject to a 10% penalty. Tools to help manage your 1040 : Tools to help manage your 1040 Municipal Bonds The bond is backed by agencies of the US Government. The guarantee applies only to the timely payment of principal and interest. The market value of the security will fluctuate with changes in market conditions, and you may receive more or less than originally invested upon redemption or sale. TAX SMART Tip #6: Deduct CD interest penalties : TAX SMART Tip #6: Deduct CD interest penalties Tools to help manage your 1040 : Tools to help manage your 1040 Municipal Bonds Tax-exempt money market funds Roth IRA The bond is backed by agencies of the US Government. The guarantee applies only to the timely payment of principal and interest. The market value of the security will fluctuate with changes in market conditions, and you may receive more or less than originally invested upon redemption or sale. TAX SMART Tip #7: Consider a Roth IRA : TAX SMART Tip #7: Consider a Roth IRA Tools to help manage your 1040 : Tools to help manage your 1040 Traditional IRA Early withdrawals may be subject to a surrender charge. In addition, distributions prior to age 59 ½ may be subject to a 10% penalty. Some IRA’s have contribution limitations. TAX SMART Tip #8: IRA Strategic Withdrawal : TAX SMART Tip #8: IRA Strategic Withdrawal Early withdrawals may be subject to a surrender charge. In addition, distributions prior to age 59 ½ may be subject to a 10% penalty. This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel. Tools to help manage your 1040 : Tools to help manage your 1040 Traditional IRA Employer-sponsored Retirement Plans Annuities* *Early withdrawals may be subject to a surrender charge. In addition, distributions prior to age 59 ½ may be subject to a 10% penalty. This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel. Slide 39: Offset investment gains with losses TAX SMART Tip #9: Take advantage of “like” investments : TAX SMART Tip #9: Take advantage of “like” investments This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel Other Strategies to Consider : Other Strategies to Consider Tax free exchanges US Treasuries Put capital losses to good use Determine which shares to sell first This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel Tools to help manage your 1040 : Tools to help manage your 1040 IRS Section 42 investing This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel 3 Keys to Manage your 1040 : 3 Keys to Manage your 1040 1. How Income Taxes Work 2. Tax-favored Investing and Saving 3. Tax Planning Opportunities Charitable Contributions : Tax Deduction Lowers Cost of Charitable Donation This hypothetical example is used for illustration purposes only. Actual results may vary Charitable Contributions Source: Publication 526 and 561 of www.irs.gov TAX SMART Tip #10: Consider charitable donations : TAX SMART Tip #10: Consider charitable donations This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel Source: Publication 526 and 561 of www.irs.gov Slide 46: “I’m proud to pay taxes in the United States, the only thing is, I could be just as proud for half the money” - Arthur Godfrey, entertainer © 2008, 300 Financial Tax quotes courtesy of www.irs.gov Reducing your Tax Risk : Reducing your Tax Risk Minimize taxable income in retirement Maintain maximum deductions Make decisions that qualify you for 0% capital gains Use tax harvesting to your advantage Minimize taxes on social security Generate Tax Free Income For specific professional assistance, the services of the appropriate professional, such as CPA, should be sought. Don’t pay tax on money you aren’t spending : Don’t pay tax on money you aren’t spending Slide 49: SIMPLIFIED 1040 Latest Revision for: 2008 1040 Department of the Treasury - Internal Revenue Service Your Social Security Number Part 1 Income XXX-XX-XXXX FEDERAL INCOME TAX FORM 2. Send it in 1. How much money did you make last year? This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel © 2008, 300 Financial Slide 50: Taxes Estate Estates of Famous People… (but not smart) : Estates of Famous People… (but not smart) Marilyn Monroe $819,176 $370,426 Elvis Presley $10,165,434 $2,790,799 Gross to Estate Net to Heirs Source: The Cornerstones of Estate Planning Tools & Practice, ING. Retrieved September 3, 2009, www.bsibroker.com Slide 52: J.P. Morgan $17,121,482 $5,227,791 John Rockefeller, Sr. $26,905,182 $9,780,194 Gross to Estate Net to Heirs Estates of “super smart” people… (or were they)? Source: The Cornerstones of Estate Planning Tools & Practice, ING. Retrieved September 3, 2009, www.bsibroker.com 3 objectives of Estate Planning : 3 objectives of Estate Planning To help Protect you in the event of accident or illness To help Preserve your assets so that they can be transferred in a timely and tax-efficient way To help Protect your loved ones This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel Don’t take anything for granted : Don’t take anything for granted Slide 55: “Another good thing about being poor is that when you are seventy your children will not have declared you legally insane in order to gain control of your estate.” - Woody Allen Famous quotes courtesy of www.newretirement.com Assets can be transferred in a variety of ways : Assets can be transferred in a variety of ways JTWROS Beneficiary Trust Will/Probate Revocable Living Trust (RLT) : Revocable Living Trust (RLT) One vehicle that helps make sure your assets pass efficiently How it Works : How it Works Grantor: outlines “who gets what” Trustee: owns and/or manages the assets Beneficiary: uses or receives the assets in the trust Source: American Bar Association, www.abanet.org. Retrieved August 20,2009 Revocable Living Trust : Successor Beneficiaries are generally selected…usually the children Successor Trustee or Trustees are selected… Instructions are placed within the Revocable Living Trust to tell the Successor Trustee how assets are to be managed and distributed. Revocable Living Trust Case Study : Case Study Case Study : Case Study This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel Why is this easier? : Why is this easier? In many cases It is Faster It is Cheaper Allows the parents to make sure that things get handled the way they want Slide 63: This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel Is a minor Is from a second marriage Is part of a blended family Has a special need Not good with money May get a divorce Holding Trust : Holding Trust Customized to you and your circumstances and wishes Saves you money in Federal Estate Taxes In certain cases, the distribution of assets to a beneficiary needs to be delayed or even avoided This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel Case Study : Case Study Transfer of assets at death, subject to Federal Estate Taxes (FET) Determined by net value Everyone receives a Federal Estate Tax credit All assets over the credit amount are taxed at 45% Transfers made between married couples are exempt from FET (unlimited marital deduction) Source: Publication 950 of www.irs.gov Husband/Wife Joint Estate : Husband/Wife Joint Estate No FET Due* *Based on 2009 Tax Rates This hypothetical example is used for illustrative purposes only, actual results may vary PAM Trust : PAM Trust Protection for Surviving Spouse Beneficiaries Divorce Creditor Asset Appreciation Eliminate or minimize Estate taxes Specific to: Retirement accounts QIC Trust This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel Legal Documents that may help Protect you while you are alive : Legal Documents that may help Protect you while you are alive POA (Power of Attorney) Access to money when you need it MPOA (Medical Power of Attorney) Electronically Filed? Quality of Life Directive Instructions to loved ones This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel 4 Key Legal Documents : 4 Key Legal Documents Revocable Living Trust Power of Attorney Medical Power of Attorney Will Coordinate Legal with Tax Planning : Coordinate Legal with Tax Planning One thing in common What should happen with your assets if you are in an accident or pass away Make sure that you are coordinating your legal and estate planning Make sure your plan is complete! Slide 71: Taxes Estate Investing Slide 72: Cohesive Strategy Slide 73: Financial Architect This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel Slide 74: Full Disclosure Protect your Retirement : Protect your Retirement Taxes Inflation Market Losses Slide 76: “When a man retires, his wife gets twice the husband but only half the income.” - Chi Chi Rodriguez Famous quotes courtesy of www.newretirement.com TREE Plan : TREE Plan These examples are hypothetical only and do not represent the actual performance of any particular investments. Investments in securities do not offer a fixed rate of return. Principal, yield and/or share price will fluctuate with changes in market conditions and, when sold or redeemed, you may receive more or less than originally invested. The account balances could potentially be reduced by fees, expenses, and any applicable charges including taxes based on the savings/investment vehicle selected to fund the strategy. Slide 78: These examples are hypothetical only and do not represent the actual performance of any particular investments. Investments in securities do not offer a fixed rate of return. Principal, yield and/or share price will fluctuate with changes in market conditions and, when sold or redeemed, you may receive more or less than originally invested. The account balances could potentially be reduced by fees, expenses, and any applicable charges including taxes based on the savings/investment vehicle selected to fund the strategy. Income Planning vs. Spending : Income Planning vs. Spending Potential Benefits Segment by time; providing flexibility Reduce your fees Reduce Taxes Focus Assets Slide 80: “The question isn't at what age I want to retire, it's at what income.” - George Foreman Famous quotes courtesy of www.newretirement.com Customize a plan specific to you : Customize a plan specific to you Slide 82: Taxes Understand how taxes work Practice tax favored investing and saving Utilize tax planning opportunities Slide 83: Estate Planning Don’t assume the defaults are best for you or your family Have documents in place to protect you and your family Slide 84: Investing Coordinate and customize Consider segmenting Slide 85: Taxes Estate Investing US This information is not intended to provide tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel It’s a lot to think about………. : It’s a lot to think about………. Where do you go from here? : Where do you go from here? Slide 88: Next Step… Only 2 Choices Stay where you are… hope everything is okay. Or 2) Get a second opinion and make sure everything is okay. Request a FREE copy of our special report “Managing Income in Retirement” 530-377-5180 patrick@mcnallywealth.com www.mcnallywealth.com Slide 89: Disclosure McNally Patrick Daniel CRD #154642 is a Registered Investment Advisor in the State of CA, Dba McNally Wealth Management 6590 Lockheed Dr. Redding, CA 96002 (530) 377-5180 This seminar/webinar is for information only and is not an offer to sell or invest in securities. Please refer to all appropriate prospectuses prior to any investment. Investments can, and do, lose money. This seminar is designed to provide accurate and authoritative information on the topics covered. However, it is not intended to provide specific legal, tax, or other professional advice. The strategies promoted in this seminar can neither guarantee a profit nor prevent against a loss. For specific professional assistance, the services of the appropriate professional should be sought.