Welcome to Legacy Guard's webpage dedicated to Tax Free Retirement Accounts. Here, we will provide you with valuable information about these accounts and how they can benefit you in planning for a secure and tax-efficient retirement.
Why hasn't my financial advisor informed me about this opportunity?
Reason 1: Many financial advisors are unaware of the existence of tax-free retirement accounts (TFRAs) and how to structure them to benefit the account holder in terms of tax savings.
Reason 2: Financial advisors often recommend financial products based on the recommendations of their company, limiting their knowledge and options.
As a result, less than 0.07% of Americans currently have a tax-free TFRA account, while over half of the population has a taxable 401(k) or contribution-limited Roth IRA.
Let's compare the benefits of different retirement accounts:
With a fully taxed 401(k):
- Taxes are paid on growth at the time of withdrawal
- The growth and principal are not guaranteed, as they fluctuate with the market
- Early withdrawals are penalized up to 10%
With a Roth IRA:
- Taxes are not paid on growth, but there is a yearly contribution limit of $6,000
- The growth and principal are not guaranteed, similar to a 401(k)
- Early withdrawals are penalized at 10%
With a tax-free TFRA:
- Growth is never taxed, as long as the account is compliant with IRS tax-code
- There are no contribution limits, allowing for unlimited deposits that grow tax-free
- Income does not need to be reported to the IRS within this account
- The interest rate can be guaranteed, ensuring consistent growth even during market downturns
- The account is liquid, allowing for penalty-free withdrawals at any time
And there are even more advantages to having an account like this...
But you may wonder if it's too good to be true. The answer is no.
Tax-free retirement accounts have been utilized by wealthy individuals and families for over a century to accumulate and pass on fortunes in a legally tax-free environment. Even notable figures like President John F. Kennedy and John McCain have benefited from these accounts.
The question now is whether you qualify for a tax-free retirement account.
A TFRA account is not exclusive to the super-rich, but it does require certain qualifications. Schedule a 15-minute phone call to determine if you meet the criteria for this opportunity.
Reason 2: Financial advisors often recommend financial products based on the recommendations of their company, limiting their knowledge and options.
As a result, less than 0.07% of Americans currently have a tax-free TFRA account, while over half of the population has a taxable 401(k) or contribution-limited Roth IRA.
Let's compare the benefits of different retirement accounts:
With a fully taxed 401(k):
- Taxes are paid on growth at the time of withdrawal
- The growth and principal are not guaranteed, as they fluctuate with the market
- Early withdrawals are penalized up to 10%
With a Roth IRA:
- Taxes are not paid on growth, but there is a yearly contribution limit of $6,000
- The growth and principal are not guaranteed, similar to a 401(k)
- Early withdrawals are penalized at 10%
With a tax-free TFRA:
- Growth is never taxed, as long as the account is compliant with IRS tax-code
- There are no contribution limits, allowing for unlimited deposits that grow tax-free
- Income does not need to be reported to the IRS within this account
- The interest rate can be guaranteed, ensuring consistent growth even during market downturns
- The account is liquid, allowing for penalty-free withdrawals at any time
And there are even more advantages to having an account like this...
But you may wonder if it's too good to be true. The answer is no.
Tax-free retirement accounts have been utilized by wealthy individuals and families for over a century to accumulate and pass on fortunes in a legally tax-free environment. Even notable figures like President John F. Kennedy and John McCain have benefited from these accounts.
The question now is whether you qualify for a tax-free retirement account.
A TFRA account is not exclusive to the super-rich, but it does require certain qualifications. Schedule a 15-minute phone call to determine if you meet the criteria for this opportunity.
The four buckets of taxes that everyone is subject to.
The first bucket is your “taxable” bucket. These accounts are funded with after-tax dollars. So any accounts or financial vehicles that you pay taxes on each year, whether or not you pull the money out, fall into this bucket. What does that include? Well, it includes bank accounts like money markets or CDs, or non-retirement investment accounts with stocks or bonds – anything that gives you a 1099 each year, even if you didn’t pull the money out, falls into this “taxable bucket.” Hence the taxes owed - are on what you make, not what you take.
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The second bucket is the “tax deferred” bucket, meaning these accounts are funded with pre-tax dollars, not to be taxed until you withdrawal the money at a later point in time. Generally speaking there are three primary vehicles that fall into the “tax deferred” bucket;
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The third bucket is your “tax-free bucket” which is funded with after-tax dollars, and accumulates to be withdrawn at a later date, tax-free. Again there are primarily three financial vehicles that are currently tax-free;
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The fourth bucket is “income and estate tax free” and that’s where you get into trusts and other special arrangements, such as charitable trusts and irrevocable trusts.
Now, here’s what you need to know – if you want to reduce taxes on your assets over time, you need to move assets into the most efficent bucket. A common mistake many people make, if their objective is to reduce their tax liability, is often, right here; they have the majority of their assets in qualified retirement plans. This has the potential to create significant tax liabilities down the road. |
Here's the important information you should be aware of: if you want to decrease the taxes on your assets in the long run, you should transfer your assets to the appropriate category. Many people make a common mistake when trying to lower their tax obligations - they tend to have most of their assets in qualified retirement plans. This can lead to substantial tax liabilities in the future. Therefore, before choosing the right financial options for your retirement plan, it's crucial to consider the potential impact of taxes on your retirement income. This is where the concept of the four tax buckets comes into play. Which tax bucket are your current investments in?
Contact Us:
If you're interested in learning more about Tax-Free Retirement Accounts (TFRA) and their benefits, please reach out to us at [email protected].
Our team of experts are ready to assist you and address any questions you may have.
Our goals during our first conversation with you:
1. Addressing the primary concern of most Pre-Qualified TFRA applicants: Is this legitimate? (In short, thousands of qualified individuals set up a TFRA each year, confirming its authenticity.)
2. Assessing the suitability of the TFRA strategy for your specific needs. (We prioritize your best interests and reject over 70% of applicants if it doesn't align with their current circumstances and financial goals.)
3. Being concise to respect your time and ensure we focus on what truly benefits you. (Typically, within just 5 minutes, we can determine if it's worthwhile to proceed to the next step.)
Start planning for a tax-free retirement with Legacy Guard today!
If you're interested in learning more about Tax-Free Retirement Accounts (TFRA) and their benefits, please reach out to us at [email protected].
Our team of experts are ready to assist you and address any questions you may have.
Our goals during our first conversation with you:
1. Addressing the primary concern of most Pre-Qualified TFRA applicants: Is this legitimate? (In short, thousands of qualified individuals set up a TFRA each year, confirming its authenticity.)
2. Assessing the suitability of the TFRA strategy for your specific needs. (We prioritize your best interests and reject over 70% of applicants if it doesn't align with their current circumstances and financial goals.)
3. Being concise to respect your time and ensure we focus on what truly benefits you. (Typically, within just 5 minutes, we can determine if it's worthwhile to proceed to the next step.)
Start planning for a tax-free retirement with Legacy Guard today!
Important Things to Know about Your Social Security Benefits • Social Security benefits are not intended to be your only source of retirement income. You may need other savings, investments, pensions, or retirement accounts to make sure you have enough money when you retire. • You need at least 10 years of work (40 credits) to qualify for retirement benefits. The amount of your benefit is based on your highest 35 years of earnings. If you have fewer than 35 years of earnings, years without work count as 0 and may reduce your benefit amount. • To keep up with inflation, benefits are adjusted through "cost of living adjustments." • If you get retirement or disability benefits, your spouse and children may qualify for benefits. • When you apply for either retirement or spousal benefits, you may be required to apply for both benefits at the same time. • The age you claim benefits will affect your surviving spouse's benefit amount. For example, claiming benefits after your full retirement age may increase the Spouse, if benefits start at full retirement age amount on page 1; claiming early may reduce it. • If you and your spouse both work, use the my Social Security Retirement Calculator to estimate spousal benefits. • If you are divorced and were married for 10 years, you may be able to claim benefits on your exspouse's record. If your ex-spouse receives benefits on your record, that does not affect your or your current spouse's benefit amounts. • Learn more about benefits for you and your family at ssa.gov/benefits/retirement/planner/ applying7.html . • When you are ready to apply, visit ssa.gov/benefits/retirement/apply.html . • The Statement is updated annually. It is available online, or by mail upon request.
401(k) withdrawal rules for people between 55 and 59 ½ Most of the time, if you withdraw cash from your 401(k) before age 59 ½, you must pay a 10% penalty in addition to your regular income tax. However, in some circumstances, you can withdraw your savings without penalty at age 55 or older. To bypass the penalty, you cannot be a current employee of the company that sponsors the 401(k), and you must have left your employer during or after the calendar year you turned 55. Many people call this the “Rule of 55”.
You should keep a few things in mind if you’re between 55 and 59 ½ years old and considering a 401(k) withdrawal from an old employer. For starters, it doesn't matter why your employment stopped. You can qualify for a penalty-free withdrawal if you quit, were fired, or were laid off. However, you must meet the requirement that mandates your employment must end in the calendar year you turn 55 or later.
The rule that requires you to be age 55 applies to the date your employment with a company stops—not the date you started taking 401(k) distributions. For example, if you retire at age 50 instead of waiting until 58 or later, you’ll need to pay the penalties for any withdrawals before you are 59 ½.
These early 401(k) withdrawal rules only apply to assets in 401(k) plans maintained by former employers and don’t apply if you’re still working for your employer. For example, an employee of Washington and Sons won’t be able to make a penalty-free cash withdrawal from their current 401(k) plan before they turn 59 ½. However, the same employee can make a withdrawal from a former employer’s 401(k) account and avoid the penalty on cash distributions if they terminate employment at age 55 or older.
Assets in an IRA have different rules about penalty-free early withdrawals. That means any funds you’ve rolled over from your 401(k) to an IRA won’t be eligible for a penalty-free early withdrawal. However, you could qualify for a different exemption based on the rules and regulations for IRAs. Consult your tax advisor to find which exemptions apply to your situation.
Also, you don’t need to be retired to avoid paying an early 401(k) withdrawal penalty. If you retire from a company at age 58 or later, you can access the savings in your 401(k) from that company with no penalty using the “rule of 55.” This fact will not change, even if you take a job with another business immediately after you retire.
401(k) withdrawal rules for people older than 59 ½ There are several types of 401(k) withdrawal types and related rules for each. However, many plans permit participants to take a distribution at the age of 59 ½ for two reasons:
If you’re still working after you turn 59 ½, your plan’s document could limit the amount you can withdraw while employed or even prevent you from making withdrawals until you terminate employment. The rules may also require you to work at a company for a specific number of years before your account becomes fully vested. With a fully vested account, all contributions from your employer may be available for withdrawal.
Most plans allow participants to take any rollover source as a distribution (including money previously rolled into the plan from another qualified plan or IRA) at any time, but taking this amount in cash before age 59 ½ may result in a 10% penalty.
You should keep a few things in mind if you’re between 55 and 59 ½ years old and considering a 401(k) withdrawal from an old employer. For starters, it doesn't matter why your employment stopped. You can qualify for a penalty-free withdrawal if you quit, were fired, or were laid off. However, you must meet the requirement that mandates your employment must end in the calendar year you turn 55 or later.
The rule that requires you to be age 55 applies to the date your employment with a company stops—not the date you started taking 401(k) distributions. For example, if you retire at age 50 instead of waiting until 58 or later, you’ll need to pay the penalties for any withdrawals before you are 59 ½.
These early 401(k) withdrawal rules only apply to assets in 401(k) plans maintained by former employers and don’t apply if you’re still working for your employer. For example, an employee of Washington and Sons won’t be able to make a penalty-free cash withdrawal from their current 401(k) plan before they turn 59 ½. However, the same employee can make a withdrawal from a former employer’s 401(k) account and avoid the penalty on cash distributions if they terminate employment at age 55 or older.
Assets in an IRA have different rules about penalty-free early withdrawals. That means any funds you’ve rolled over from your 401(k) to an IRA won’t be eligible for a penalty-free early withdrawal. However, you could qualify for a different exemption based on the rules and regulations for IRAs. Consult your tax advisor to find which exemptions apply to your situation.
Also, you don’t need to be retired to avoid paying an early 401(k) withdrawal penalty. If you retire from a company at age 58 or later, you can access the savings in your 401(k) from that company with no penalty using the “rule of 55.” This fact will not change, even if you take a job with another business immediately after you retire.
401(k) withdrawal rules for people older than 59 ½ There are several types of 401(k) withdrawal types and related rules for each. However, many plans permit participants to take a distribution at the age of 59 ½ for two reasons:
- You're permitted to withdraw funds from your 401(k) at this age without incurring a 10% early withdrawal tax penalty on your withdrawal amount, and
- ERISA regulations allow participants that reach age 59 ½ to withdraw deferrals from 401(k) plans (subject to plan provisions).
If you’re still working after you turn 59 ½, your plan’s document could limit the amount you can withdraw while employed or even prevent you from making withdrawals until you terminate employment. The rules may also require you to work at a company for a specific number of years before your account becomes fully vested. With a fully vested account, all contributions from your employer may be available for withdrawal.
Most plans allow participants to take any rollover source as a distribution (including money previously rolled into the plan from another qualified plan or IRA) at any time, but taking this amount in cash before age 59 ½ may result in a 10% penalty.