 In addition to federal, state, city and death taxes, there are 59 other
varieties. Relatively few taxes, however, account for the bulk of the burden on
citizens, says Garuda, whose clients include retirees, people planning for
retirement, physicians, business owners and other professionals.
He thinks his fellow Americans deserve a shot at keeping more of their money.
"When I came to the United States, I had less than $10 in my pocket, but I
had an excellent education as an engineer. When I married a physician, I
realized how expensive it is to make a good living here," says Garuda, who
quickly applied his analytical engineering mind to understanding the complicated
tax system.
"Since this country has given me so much, I wanted to repay my fellow
Americans with strategies for keeping more of their own money."
Garuda identifies some of the most expensive and common tax hurdles affecting
Americans and offers advice on troubleshooting our tax system.
The IRA tax: great on the front
end, terrible down the road.
Solution: An IRA is tax-deferred, which means it will accumulate value
over time. But when you withdraw from it, you will be heavily penalized with
high taxes. That's why you should convert this asset to a Roth IRA, which
allows your money to grow tax-free. Since the money put in was already
taxed, you don't have to pay any taxes when you take it out, and, overall,
you'll save a significant amount of money.
Problem: Too many people don't take advantage of creating tax-free
income via insurance products.
Solution: From a financial perspective, retirees and professional
planners run into a significant issue: seniors, blessed with good health,
who outlive their money. But with certain insurance products, retirees can
create tax-free income while covering the later years of retirement -- and
protect their wealth if they become severely ill. There are certain
insurance products tied to the stock market that can help people accumulate
assets in the long run. Many of these products offer a tremendous upside for
potential without the downside of increased risk.
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 Missed opportunities -- people who don't take
advantage of free money in a 401(k).
Solution: Perhaps the company you work for is, like many
others, bureaucratic to the point of being impractical. Your
employer may not have done the best job of communicating details
about benefits such as matching 401(k) contributions, or you may
not have taken the time to learn them. Now's the time; this is
free money. If your employer is offering a 50 percent match on
your first 6 percent of contributions to the 401(k), you should
be contributing at least 6 percent. Educate yourself on your
company's plan so you can take full advantage.
___
Rao K. Garuda, CLU, ChFC, is president and CEO of
Associated Concepts Agency Inc.
-- "The Missing Piece" of financial planning, founded in 1978 -- and
a popular speaker at seminars and conferences for financial industry
professionals. He came to the United States from India 35 years ago
with a degree in engineering and, after marrying a physician,
realized he had to learn how to reduce the couple's taxes.
Disappointed in the financial advice he received from professionals,
he went to business school and developed expertise in tax reduction
and protecting money from stock market losses. Garuda is a founding
member of First Financial Resources, a national organization with
over 75 partners in the USA; a life member of the Million Dollar
Round Table; and a life member of MDRT's Top of the Table for 21
consecutive years.
[Text from file received from
News and Experts]
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