Avoid the 401(k) Tax Deferral Trap-

• Bob and Carol did – they got $149,636

• Dr L did – he got $199,701

• Jeff and Lisa did – they got $253,824

• Dr M did – he got $1,062,040

Do you know –

• Who benefits MOST from your 401(k) tax deferred savings plan and why? –(Hint:  If you think it’s you, be sure to watch the videos below!)

• How much your 401(k) contributions saved you in taxes this year?  Do you know how much your 401(k) distributions can cost you in taxes in the future?

• If you’ve saved money into a 401K and tax-deferred account, you’re headed for The Deferral Trap.  Once you compare the true benefits and costs how that will impact your future lifestyle, you may reconsider your saving strategy.

Jeff & Lisa were heading into the trap.  They made 2 small adjustments that saved them $31,843 in 1 year and $253,824 over 10 years.  Find out what course you’re on and if you could do the same – or better!

Part 1- (recommend full screen for better resolution)

Part 2-

Part 3-

See Arrow #4 – Their ‘Current Plan’ had Jeff and Lisa on track to pay $33,172 in taxes during this year.  Implementing two simple recommendations from us changed their tax bill to $1,329, saving $31,843 in this year alone!  If this were your situation, which check would you prefer to write?

See Arrow #5 – During their first 10 years in retirement, implementing the same tactic saves them $253,824 in taxes.  Wouldn’t you prefer to keep that money and make your own decisions about what to do with it?  (Watch Video Explanation Here.  Then continue below.)

It’s important to know that tax rates have been higher in the past.  For the last 2 decades, tax rates have been at historic lows.

The link below to The Tax Foundation cites income tax rates from 1913 to 2009.  See for yourself where taxes have been in the last century when the government had crises it needed to pay for.  (Given the financial obligations our government has created for us in 2010, is there any doubt one of the ways to address these problems will be higher taxes in the future?)  Americans endured tax rates up to 91% through the 1950s, 60s and 70% in the 1970s.  Perhaps you’re old enough to remember.  In case you’re not, the facts are in this link:

http://www.taxfoundation.org/files/fed_individual_rate_history-20091231.pdf

Could tax rates work their way up toward where they were before?  That makes this discussion even more important.

What’s your strategy to accumulate money that’s protected from higher tax rates?

Not tax deferred – that’s setting you up to pay higher taxes later.   Tax Free.

Look back at the picture to see the impact of saving money in ‘tax deferred’ accounts vs. ‘tax free’ accounts.

Arrow #4 points to taxes paid following the Current Plan.  This is what’s practiced by most Americans and could be what you’re doing, too.  It’s the accepted ‘conventional wisdom’ of our day.  But it’s based on erroneous assumptions rooted in an outdated economic model.  And, it’s a huge mistake!  Would you rather pay $33,172 or, would you rather pay the $1,329 shown on the second line of arrow #4: the tax paid in The Family Plan?  If you allow yourself to get caught in The Deferral Trap, you’ll pay the $33,172.

Arrow #5 shows the Tax Difference for that year, $31,843, and the Cumulative tax savings in The Family Plan after 10 years, $253,824.  Would you rather keep that money and decide how to use it, or would you rather pay it to the IRS?

If you advance 10 more years to age 87, the savings are even more profound.  The Tax Difference that year is over $34,000 and the Cumulative Savings are over $590,000 during a 20 year span.  Again, would you rather decide what to do with that money or would you rather send it to the IRS?

It’s also important to note that Jeff and Lisa’s ”Current Plan” runs out of money at age 91.  They’ll be living only on Social Security from that time on.  The two simple changes they implemented in “The Family Plan,” which have literally no impact on their current lifestyle, supplies enough income to maintain their standard of living past age 100.  Wouldn’t you want that kind of security for yourself and your family?

Make sure you don’t pay taxes like what’s shown in the “Current Plan” and you keep the “Cumulative Savings” to use as you like.  Find out what course you’re on and what the difference could be, if you don’t already know.  ONE or TWO small changes could dramatically affect how much money you get to control and ensure you don’t outlive your money.

Let’s re-visit a question from above:  Do you think tax rates will be higher in the future than they are today?  Given our state of fiscal affairs, how can’t they be higher?  Now,you should pay what you’re required to pay in taxes.  But, there’s no reason to pay any more than you have to.  Furthermore, with the cost of living likely to rise with inflation in the coming years, we could all benefit by keeping control of as many of our hard earned dollars as we can.  There are legally sanctioned ways available to you, if that’s what you want.  I’ll show you proven strategies that capitalize on Internal Revenue Code 7702 and 72(e), along with Roth IRAs, that’s brought benefits to thousands of Americans for several decades.

Does your Current Plan have you on track to pay ‘$33,172′ or ‘$1,329?’  Run your numbers through our software so you can see how your Current Plan will perform.  Learn whether there’s a “Family Plan” alternative that could dramatically reduce your future tax burden and increase the amount of discretionary income you can keep.  Wouldn’t you want to know for certain?  Of course, you can send the money to the IRS if you prefer.

It’s a free, no obligation conversation today that will hurt lot less than the cold slap in the face from reality later.

What do you have to lose from such a conversation?  You’ll lose much more by NOT having the conversation.  What if our conversation shows you how to save $1000?  Would that be worth your time?  What if your number is $10,000 or $100,000?  Would that be worth your time?  You’ve seen real numbers – $32,843 and $253,824 - above.  For several clients, this conversation has been worth over $500,000 in tax savings alone.  And if we run your numbers through the software and find you’re optimized perfectly, won’t you sleep even better at night?

Position yourself to start benefiting today.  Call 425-829-4110 or email scott@scottscholz.com and schedule your free, no obligation consultation.