Retirement Strategy

Retirement plan income can be one of the largest tax liabilities in a portfolio. All income from retirement plans (except for ROTH IRAs) is taxed as ordinary income. This means that if you pass away with money in retirement plans, your heirs could incur a hefty tax. It’s possible they would pay not only income taxes on that money – but also estate taxes. In short, your heirs could lose up to 70% of your retirement plan funds to Uncle Sam.

There is a silver lining however. Most people agree that today’s income taxes are the lowest we will see in our lifetimes. To this end, it’s important to plan for taxes when creating your retirement accounts. We can structure your plans to effectively provide tax-free and tax-advantaged income for you and your heirs.

Taxes on Trusts

It’s one thing to build your retirement assets – and quite another to efficiently take money out of your plans. Many people use trusts as the beneficiary for their retirement assets, but trusts can be taxed at the highest tax rates if earning just $12,400 for 2016.  Individuals have to earn over $415,050 ($466,950 for married couples) to be taxed at the highest rate. So moving considerable amounts of money to a trust can be a tax bomb.

The rules and regulations for retirement plan distributions are complicated. We work with our clients and their families to efficiently manage their retirement assets, often creating a living legacy for their heirs.

Stretch IRAs

The stretch IRA concept is simple – only take out the minimum required distributions each year from your IRA – that way your IRA will grow tax-deferred as long as possible. With proper planning, your heirs can apply the same strategy to their inherited nest egg with impressive results. It all depends on your investment returns and how long the money stays in the plan, but the Stretch IRA is a powerful tool. The problem is people don’t know how to set up the accounts to obtain the maximum stretch.

We work with our clients and their heirs to ensure that they are educated on the benefits of, and the techniques used, to obtain the maximum stretch. The ultimate stretch is with the Roth IRA, as no Minimum Distributions are required during the IRA owner’s lifetime – and no taxes are due when funds are distributed.


Our creative, common sense approach to retirement and estate planning can help build your assets and maximize your income while you are alive, and leave your assets to whomever you’d like – instead of to attorneys and Uncle Sam. Call us at 617-965-7900 to arrange for a complimentary consultation.

This information is not intended to be a substitute for specific tax, legal or investment planning advice. We suggest you discuss your specific tax issues with a qualified tax advisor.