IT CAN BE VERY DIFFICULT WITHOUT PROFESSIONAL ADVICE TO MAKE THE RIGHT DECISION FOR YOUR PARTICULAR FINANCIAL SITUATION. HERE ARE SOME EXAMPLES OF HOW WE HAVE HELPED AND WHAT YOU MAY ENCOUNTER. . . .
Example: Distribution from retirement plan*
A female, age 48 in the 15% tax bracket cashed out her 401-k with a balance of $53,000. Unbeknownst to her, this put her in the 25% tax bracket and there was a mandatory 20% tax withholding. In addition to her federal and state taxes, she was subject to a 10% early distribution penalty because of her age. At tax time she owed several thousand dollars to federal and state and ended up losing nearly half of her 401-k distribution.
Had she consulted with a BBFG advisor, she most likely would not have triggered a 401-k withdrawal, but instead, rolled over her 401-k into a qualified IRA account; this would have avoided excess taxes and penalties.
Example: Tax-exempt income*
A retiree inherited money from his father. He invested the money into tax-exempt, Minnesota municipal bonds and was unaware that the interest would affect his overall tax liability. He owed a greater amount of taxes than expected. What many individuals do not know is that the formula to calculate the amount of taxable social security includes tax-exempt income. Due to the amount of tax-exempt interest, more than half of his social security benefits became taxable.
In counseling with a BBFG investment professional, he was able to reposition his investment into one that grows tax-deferred and doesn’t result in any taxable social security income.
*The above situations are only brief examples. Please consult a professional on your individual situation.