TAX AND DISTRIBUTION RULES
01.Core Concepts
• Accumulation phase • Focus on growth, typically within qualified or tax-advantaged accounts • Portfolio return and wealth accumulation are the focus. • Distribution phase (retirement) • Focus on the amount of income after-tax • Use of tax minimization, reduction or avoidance • Harvesting (distribution) plan • Considers taxation and the value of tax-deferred growth, minimum distribution rules and distribution impact on IRMAA • Complexities arise with stock opt ions, non-qualified deferred compensation, and business ownership WITHDRAWAL RATES • Sustainable withdrawal rates • Dependent on other sources of inc ome and likely will fluctuate throughout retirement • What works on paper may not work in practice. • Human beings are not always rationale and influenced by many outside forces. • Overspending or excess gifting may impact the sustainable withdrawal rate • Intervention with a financial therapist may be needed. • Under spending could also be an issue • Often driven by fear • Retiree forgoes enjoyment available and affordable to them