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This article also partially published in Northwest Arkansas Living Magazine Apartments Edition

Winter 2007 Edition

Volume 2, Number 1

Published: March 2007


401K, IRA and Estate Maximization;

An Experts Guide to Tax Options & Estate Planning

Will G. Louden™™


Call Attorney Sexton Today!



By: Deborah Sexton, Estate Attorney

Deborah Sexton Law Office, P.A.

Save More Money!

              One of the primary facets of wealth creation and tax minimization involve clear, sound and competent estate planning. Below, for the first time ever, we offer you an experts look into IRA's, 401K's, Trusts and a few tax options available to help minimize the impact and burden on the value of your now and future wealth. Remember that it's never too late or too soon to begin the process of estate planning and wealth creation. After all, wouldn't you want to make certain that you and your heirs get the most out of your estate, and that your assets are properly disposed of in the manner by which you desired upon your death? Consider a premier expert in estate planning, Northwest Arkansas's own Deborah Sexton.

              From the time we entered the workforce, we've learned how important

Deborah Sexton, Estate Planning Attorney & Expert

Deborah Sexton, Attorney & Estate Planning Expert

Call Attorney Sexton Today for a GREAT Plan!

it is to save for retirement. In fact, if we put $1,000 away for someone graduating from college today, it would be worth over $72,000 by the time they start collecting social security. (This assumes graduation at age 22, social security at age 67, and a 10% rate of return.) Albert Einstein called the power of compounding the eighth wonder of the world.

              Today's workers can do this retirement savings with pre-tax dollars in their 401k or IRA. But what happens when the time comes and you withdraw the money? The entire withdrawal is subject to income tax. If you die and leave your 401k or IRA to your children or other beneficiaries, it is taxable upon withdrawal by them. Further, if you die with more than $2 million, including your retirement assets, the balance of the retirement plan before the impact of income tax will

be included in determining your estate taxation.

              The combined affect of estate and income taxation could result in the majority of the assets going to pay taxes. For example, assets over $2 million are estate taxed at 45%. In addition, if some of the assets are withdrawn to pay the estate tax, the withdrawal would incur federal and state income tax of as much as 35% or 40%. So, you could easily have two-thirds of the assets going to taxes.

              There are a few strategies to help soften the blow of the tax bite on retirement plans. First, you can defer the income taxes as long as possible. After you reach 70.5 years, you must start taking distributions based on the "Uniform Lifetime Table." Based on this table, you would take approximately 1/27th the first year and slowly increasing ...