Tax troubles coming for IRAs and 401Ks over $200,000

“If you have more than $200,000 in a traditional IRA or 401K, your family could have a big problem coming in retirement,” warns financial advisor Ryan Thacker.

“The problem is taxes – and it’s going to get bigger and bigger unless you take action,” adds Tyson Thacker.

Financial advisors Ryan Thacker and Tyson Thacker are the president and CEO of B.O.S.S. Retirement Solutions, a financial advisory firm with six locations throughout the Wasatch Front.

For most traditional IRAs and 401Ks, the Thackers explain, it’s important to remember that you haven’t paid taxes on the money in these accounts.

That’s by design. One of the biggest benefits of having an IRA or 401K is you don’t pay taxes on your contributions to these accounts. And you also don’t pay taxes on the growth of your portfolio.

For a traditional IRA or 401K, this means you can avoid paying taxes on that money for decades – until you retire.

“But that’s when this big problem could rear its ugly head,” explains Ryan Thacker. “Your family is likely to face surprisingly large tax bills when you begin to withdraw this money in retirement.”

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The problem is taxes – and it’s going to get bigger and bigger unless you take action.

–Tyson Thacker, B.O.S.S. Retirement Solutions

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On a retirement account of $200,000 or more, the total tax bills on your withdrawals could easily be tens of thousands of dollars. If you’ve saved more, your tax obligations could exceed hundreds of thousands of dollars. But a skilled tax strategist could help you dramatically reduce these taxes when you retire.

“Most families haven’t thought about this,” Tyson Thacker says. “They want to think of the money in their IRA or 401K as their money. But it’s really a joint account between you and Uncle Sam. Because remember, you haven’t paid taxes on this money yet – Uncle Sam is just sitting there waiting to take his cut. And the way tax laws are written, you can’t touch that money without handing a hefty share of it to the IRS.”

There is some good news though. You have more control over how much you pay in taxes when you retire than at any other time in your life. The key is understanding the new strategies available to you – strategies B.O.S.S. often helps their clients implement.

“It’s important to understand how this works,” Tyson Thacker says. “Because you could end up paying far more in taxes than you have to unless you take action now to reduce these future tax bills.”

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Tax planning is personalized – there’s no one-size-fits-all solution.

–Ryan Thacker, B.O.S.S. Retirement Solutions

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The Thackers emphasize that B.O.S.S. Retirement Solutions client families achieve these savings through tax planning, not tax preparation. By the time your CPA is filing your taxes for the April 15 deadline, what’s done is done. You’re just reporting history.

However, if you take advantage of some specific tax planning strategies, you could dramatically reduce your taxes in retirement – especially if you take these steps before you retire, or within the first few years of retirement.

“Remember that withdrawals from your IRA and 401K are all treated like ordinary income,” advises Tyson Thacker. “And you have to pay taxes on that income.”

This also includes the Required Minimum Distributions (RMDs) that start at age 73 and continue until your accounts are depleted, or you pass away. RMDs are a requirement to take money out of your IRA or 401K, which turns your money into taxable income.

“It becomes even more complex when you include your Social Security income and other investment income,” says Ryan Thacker. “While it’s wonderful to have many different sources of income in retirement, they create even more tax obligations. We often work with families to ensure a diversified mix of pre-tax, taxable, and tax-free income. For many, this can be the best way to minimize taxes and help you keep more of your hard-earned money in your pocket.”

It’s important to understand that you could be forced into a higher marginal tax bracket when you add up the withdrawals from IRAs and 401Ks, Social Security benefits, and other investment income.

But with the right tax-planning strategies, you can have more flexibility and control when accessing your retirement savings, while reducing your tax obligations.

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You could end up paying far more in taxes than you have to unless you take action now to reduce future tax bills.

–Tyson Thacker, B.O.S.S. Retirement Solutions

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“The biggest thing,” stresses Ryan Thacker, “Is to find out what will work best for your family.”

“You have to look at the total picture,” he continues. “And you have to consider all the strategies available. Tax planning is personalized – there’s no one-size-fits-all approach I can share with you. But it is very possible you could save a small fortune just by taking advantage of some of these simple tax-planning strategies.”

B.O.S.S. Retirement Solutions offers a free, customized Retirement Tax-Savings Analysis that shows you exactly how much money you could save.

During this quick appointment, they will gather some basic information from you. Then they determine the tax planning strategies that are best suited for your specific situation. Next, they’ll sit down and freely share these strategies with you, so you can see exactly how much money you could save.

While other financial advisors charge hundreds of dollars for similar services, B.O.S.S. Retirement Solutions offers this service for free, even if you’re not a client yet.

This offering could be especially beneficial for families who have saved at least $200,000 up to a few million for retirement.

To schedule your free, no-obligation B.O.S.S. Retirement Tax-Savings Analysis, call (801) 990-5055 or click here.

All advisors at B.O.S.S. Retirement Solutions are held to a fiduciary standard. This means each advisor is legally required to put your financial needs before their own.

To view this article on KSL.com, please click here.

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Tyson Thacker and Ryan Thacker are the CEO and President of B.O.S.S. Retirement Solutions. They are a five-time winner of Utah’s Best of State Award and have six offices located throughout the Wasatch Front.

This is for illustrative purposes only, results may vary. Advisory services are offered through B.O.S.S. Retirement Advisors, an SEC Registered Investment Advisory firm. Insurance products and services are offered through B.O.S.S. Retirement Solutions. The information contained in this material is given for informational purposes only, and no statement contained herein shall constitute tax, legal, or investment advice. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. You should seek advice on legal and tax questions from an independent attorney or tax advisor. BOSS submitted applications and paid application fees to be considered for the Utah Best of State for Retirement Planning awards. The award results were independently determined by the awarding organization’s criteria (https://www.bestofstate.org/about.html) and the information BOSS provided in the applications. BOSS received the Utah Best of State award in 2019, 2020, 2021, 2022, and 2023. Our firm is not affiliated with the U.S. government or any governmental agency. Marketing materials are provided by Infinity Marketing Services.