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Why You Need to Check for Retirement Account 'Tax Tumors'

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In 1999, at the age of 27, I woke up in a hospital emergency room. The doctor explained that I had arrived at the ER several hours earlier because I had had a seizure.

The MRI revealed a large tumor, and they referred me to a specialist who suggested immediate surgery. My option was to deal with the growth now on my terms or later on its terms. I agreed, and the surgery was successful.

In retrospect, I know I made the correct decision; I dealt with the problem.

When discussing retirement planning with your clients and prospects, consider “a tax tumor” they may have hiding in their retirement accounts.

Tax-deferred retirement accounts have something in common with my story: They have liabilities inside them, and they never stop growing.

When you own an IRA, 401(k), 403(b), federal Thrift Savings Plan, or any other type of tax-deferred account, you face a complicated reality. You can either deal with your tax liabilities now, or later. If you deal with them now, you do so on your terms. If you choose to wait, you will deal with the liabilities on the IRS’s terms.

Recent Changes

In 2020, Congress passed new laws regarding the tax liabilities inside your retirement accounts, and rules were changed. The required minimum distributions age (known as RMD’s) moved from 70 ½ to age 72.

The Secure Act also led to other changes involving tax liabilities. The buildup of non-taxable assets in qualified accounts becomes a significant source of future tax-free income.

Members of Congress have the authority to make changes in our tax code, and they hold the key; they can legislate tax changes when deemed necessary.

Introduce your clients to the concept of accepting tax liability now, in exchange for an account that is tax-free forever.

This reality makes Roth IRAs more attractive than ever before, and, at the same time, you can provide other benefits, such as using annuities for lifetime income options.

You and your clients have the opportunity to take control and deal with the liabilities inside retirement accounts on their terms. Once you do, you can leave Uncle Sam on the bench forever.

There has never been a better time to move retirement accounts from forever taxed to never taxed.

Deal with your tax tumors today. You will be so glad you did!


Brad Pistole (Credit: Pistole)Brad Pistole, CFF, is chief executive officer of Trinity Insurance and Financial Services in Ozark, Missouri. He is a Master Elite IRA Advisor with Ed Slott Company, and he is a member of the Million Dollar Round Table “Top of the Table.”