Action today can lead to great things tomorrow
Now is an opportune time to help clients plan ahead when it comes to their taxes. Talk to your clients about strategies and financial products that may help reduce or eliminate current taxes. Here are a few ideas to help get you started:
- Review their completed 1040 tax form with them—and look for tax-saving opportunities. Areas on the form to check out include “Taxable interest” and “Capital gains.”
- Show them how tax-deferred savings or investment strategies, such as an annuity, may help them reduce current taxes and avoid tax-time surprises, such as capital gains distributions and dividend or interest payments.
- Talk to them about increasing their retirement plan contributions if it makes sense for their personal situation – so they can put away more money for tomorrow and benefit from the power of tax-deferred compounding over time.
- Explore annuities as a way to save even more for retirement on a tax-deferred basis – particularly if they have maxed out their retirement plan contributions. What’s more, when they’re ready to retire, annuities can provide protected lifetime income for a more secure financial future.
- Introduce them to tax-free income strategies, such as a Roth IRA or tax-exempt bonds, if appropriate for their situation. These strategies can be an important part of an overall retirement portfolio.
You can also use our 2023 Tax Facts and Tables guide to bring them up to speed on the current tax year. This helpful reference tool provides quick and easy access to latest tax rates, contribution limits and much more.
Guarantees are backed by the claims paying ability of the issuing insurance company.
Annuities are long-term insurance products designed for retirement. An investment in a variable annuity involves investment risk, including possible loss of principal. A variable annuity contract, when redeemed, may be worth more or less than the total amount invested. Early withdrawals may be subject to withdrawal charges. Partial withdrawals reduce the contract value and may also reduce certain benefits under the contract, such as the death benefit and the amount available upon a full surrender. Withdrawals of taxable amounts are subject to ordinary income tax and, if taken prior to age 59½, an additional 10% federal tax may apply.
Retirement plans and accounts, such as an IRA, 401(k) or 403(b), etc., can be tax-deferred regardless of whether or not they are funded with an annuity. The purchase of an annuity within a retirement plan or account does not provide additional tax-deferred treatment of earnings. However, annuities do provide other features and benefits that may be important, including options for guaranteed lifetime income and a guaranteed death benefit.