Here for YOU Today and There for your FAMILY Tomorrow

The Daffy Duck School of Retirement Planning


The Daffy Duck School of Retirement Planning

Daffy Duck may have been a bit manic, but apply his thinking to your Individual Retirement Accounts (IRAs) and you’ll be on the right track. Treat your individual IRA, funded with pre-tax dollars that lowers your taxable income and contributions that grow tax free, like a pile of gold coins you want to grab from Bugs Bunny, advises CNBC in “Boomers: Take a page from Daffy Duck and his stash of gold.”

Yes, there are still taxes when you withdraw money from an IRA. The taxes typically begin on withdrawals in retirement sometime after you reach age 59½ to avoid early withdrawal penalties. If you qualify, consider a Roth IRA. It’s funded with post-tax dollars and the contributions also grow tax-free. However, the withdrawals are not taxed—unlike a traditional IRA.

Don’t just select one type of IRA over another, but rather use them in concert to mitigate taxes now, as well as in retirement. A sound strategy is to divide your money into three groups: (i) tax-deferred accounts, like a 401(k) or a traditional IRA, (ii) a tax-free Roth and (iii) taxable accounts such as brokerage or savings accounts. This diversification gives you the flexibility to pick where to withdraw funds to take advantage of the tax laws, as they exist in the future.

Can I open a Roth? Couples earning more than $196,000 and singles making $133,000 are not eligible to open Roth accounts directly. An option for these folks is a conversion. That’s where you transfer the money from your regular IRA to a Roth. However, this will be taxed at your ordinary income rate, so plan ahead.

When do I make the switch? The optimal time to convert an IRA is when you have little or no income. For example, this would be if you take a leave of absence from work, are between jobs or just retired. Each of these times present opportunities because your tax bracket may be lower.

How much do I move? It's your call as to how much money to move from a regular IRA to a Roth each year. Therefore, you have some flexibility to avoid some higher taxes. You don’t want to convert everything at once, since this would put you into a higher tax bracket. Remember, the additional converted income is taxable.

How will the Roth IRA fit with the rest of my estate plan? If you want your money to go to your children and grandchildren, the Roth conversion could be a good way to go. An inherited Roth allows your descendants to take money out of the account over the course of their lifetime, leaving plenty of time for the money to grow tax free.

Speak with your estate planning attorney to create a strategy for your IRAs to suit your overall estate planning goals.

Do you live in Miami-Dade, Broward, or Palm Beach counties in Florida? Laws are constantly changing-- has your estate plan been reviewed in the last 2-3 years? Call me (954-888-1747) right away for peace of mind. I can help!

  • My practice is exclusively estate planning and probate,
  • I have prepared numerous estate plans in 16 years of practice,
  • I have administered estates and trusts through Probate all over Florida,
  • I am a Certified Financial Planner Professional™, and
  • I am here for YOU today and there for your FAMILY tomorrow.

Reference: CNBC (March 16, 2017) “Boomers: Take a page from Daffy Duck and his stash of gold”

Why would we recommend D.T.F.? Several Reasons: Your ability to explain complex estate problems, clearly and patiently; your total lack of arrogance and pretense; a strong feeling that you are motivated by what you perceive is best for your client, rather than what would generate the largest legal fees; finally, and importantly, you are a lovely guy. A.C.

Two words cannot sum up the entire process of creating my “trust.” I enjoyed your attention to detail, your patience of explaining terms and conditions until I understood, also giving me copies to read and understand. Thank you for your suggestions on what was best for “me” but still allowing me to make my choice. Most of all, thank you for thinking of “me.” Wells Fargo said “you were the best” I cannot deny that. Again thank you very much for everything. Anna is an asset or a compliment to the firm. She is warm and very caring. It was great doing business. Thank you.