President Obama's Proposed Tax Changes

For the past 20+ years we have cautioned our clients on the wisdom of deferring income into the future. Example: IRA, 401-(k) and voluntary deferred compensation.  
 
At Financial Architects, Inc. (FAI) we have always presented this view:  For our targeted client base, and generally speaking, the likelihood of you being in a lower tax bracket in the future is remote. Data shows that the top 10% of tax payers (roughly $110,000 of AGI and above) pay over 63% of all personal income tax collected. The top 5% begins in the $170,000 AGI area and this smaller group pay 57% of the total personal income tax collected.  
 
Traditional thinking says that a dollar deferred from tax today will be taxed tomorrow in a lower bracket.  Right?  That is what “they” say. Click Here for the Deloitte report and let me know if generally you think “they” were right.  For you.  Are you convinced that your future tax brackets will in fact be lower than they are today? Another thing we often say at FAI is this:

1.    Taxes and brackets may never be lower (for you) than they are today!

2.    Your money may never be worth more than it is right now (think inflation).

We see some tremendous planning opportunities today.  Right now.  In some cases clients will want to consider taking money out of an IRA today rather than delay this any longer.  In other cases the issue of contributing new money to a 401-k (or similar vehicle) should be re-evaluated. Some will fully understand the benefits of the Whole Life strategy they have in place and want to increase what they are doing there. This one tactic continues to act as the anchor that will survive the storm!  Please do not overlook this.  Still others may want to explore the opportunity to look at how a GRAT would be a timely tactic.  
 
Whatever the particulars are, now is no time to be timid and passive.  We are witnessing a sea change when it comes to the headwinds our key clients face.  Our commitment to you has never been easier to appreciate:
 
Everything we do for our clients is structured and intended to ultimately increase their net worth, while reducing their overall risk.
The mission is to do this without any real sacrifice in lifestyle.

You have friends and work associates that need to know about this.  Feel free to pass this along! Please give me a call or send an email with thoughts, questions or comments.

Ken Grace
Financial Architects, Inc.
Tomorrow Always Comes