There's no time like the new year to start getting your finances in order. Renan Guillou, Certified Financial Fiduciary™ with Secure Wealth Planning Group, shares his tips for making the most of your finances in 2020.
1. For business owners, consider working with an asset protection and advanced tax planning company to review your previous year’s tax returns. Our team works on contingency so there is no cost to find out how much you could save or get refunded in taxes and is usually able to save business owners 30% to 50% of their taxes above what their CPA saved them.
2. Business owners or high-income earners can save up to 40% of the tax he or she would pay on his or her retirement accounts (and make it tax-free going forward)… without having to pay the huge tax bill required if it were moved to a ROTH IRA. How? By setting up a Profit Sharing Plan and opt for the Profit Sharing Plan to invest in a particular type of asset that allows the funds to grow tax-free and create tax-free cash flow in retirement.
3. Consider converting a portion of your IRA to a Self-Directed IRA in order to access different types of investment options not offered by big, brand-name advisors. These investment options provide the ability to truly diversify your portfolio across various asset classes and the opportunity for higher returns.
4. If you are planning on earning less money this year (or have paper losses in your retirement accounts), consider converting your IRA or 401k to a ROTH -- but be mindful that such a conversion will increase AGI for 2020 and possibly reduce tax benefits tied to AGI or MAGI. Make sure to consult with your tax professional before doing so.
5. Similar in concept but different in implementation and in the benefits achieved, consider recharacterizing your IRA or 401k so that all future growth and cash flow are tax-free. Contrary to a Roth conversion, this recharacterization strategy is done tax-free.