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Losavio & DeJean, LLC – Strategic Retirement Tax Planning for Baton Rouge Families

Baton Rouge Retirement Tax Planning Attorney

Minimize Tax Implications for Your Retirement Accounts

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A comprehensive estate plan is one that not only looks out for your family’s interests after you’re gone, but also your interests while you’re still here. For many retirees or those approaching retirement, planning their taxes during for this part of life can seem overly complicated and difficult to manage on their own. When you need help, the attorneys of Losavio & DeJean, LLC, are there.

Our attorneys work closely with out with our clients to help them establish personalized strategies to help them lessen the impact that taxes will have on them during retirement. For more than 40 years, we’ve been the go-to legal service provider for people looking toward retirement who want to avoid paying more in taxes than necessary. We’ll help you make sense of your situation as we take steps to help you feel more confident and at ease about retirement.

The High Stakes of Retirement Tax Planning

Ignoring the tax implications of retirement distributions is a common and costly mistake that individuals make. Without a plan, they risk being pushed into a higher tax bracket due to Mandatory Required Minimum Distributions (RMDs), or having their Social Security benefits become taxable. This can leave beneficiaries with a large tax bill. Proactive planning can help reduce these risks by implementing strategies such as Roth conversions, charitable giving, and careful sequencing of withdrawals.

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Which Kinds of Tax Should I Know about?

Unfortunately, retirement doesn’t mean you’re free of tax liability, and taxes may play an even larger role in your life than ever before.

The three main kinds of tax that retirees should be aware of come from:

  • Retirement Account Withdrawals: If you have a tax-deferred retirement account, such as a traditional IRA, 401(k), or 403(b), any money withdrawn from these accounts is treated as ordinary income and taxed at the current rate. It is important to understand the required minimum distributions (RMDs). Under current law, when you reach the age of 73, you must take a specific percentage of these distributions every year, even if you don’t need the money. These distributions can significantly increase your taxable income and potentially affect your Medicare premiums and how your Social Security benefits are taxed.
  • Income Tax: “Retirement” doesn’t always mean that you stop working. Many people who retire continue to earn some form of income from part-time jobs, consulting work, or profitable hobbies or businesses. Additionally, sources such as pension payments, rental income, and part of your Social Security benefits may be subject to federal and possibly state taxes. Understanding how these income streams interact is important for managing your overall tax situation.
  • Capital Gains Tax: Selling appreciated assets, such as your home, investment properties, stocks, bonds, or other securities, incurs a tax on the profit. This profit is the difference between the sale price and the original purchase price of the asset or its basis. The rate you pay on this profit depends on how long you held the asset. Strategic planning can help you take advantage of long-term capital gains rates, which are typically lower than ordinary income rates. However, there are specific rules that must be followed in order to qualify for these lower rates. For example, there are significant exemptions for the gain from the sale of a primary residence.

Because the federal and state tax codes can be complicated and ever-changing, it is best to consult with a retirement tax planning attorney in Baton Rouge to understand how your retirement will affect your tax liabilities. We can help you navigate these complex rules and translate them into actionable strategies for your unique situation.

Key Strategies We Employ for Baton Rouge Retirees

Our legal guidance focuses on implementing proven strategies to protect your wealth:

  • Roth IRA Conversions: Strategically converting portions of a traditional IRA to a Roth IRA in years when your income is lower. You pay taxes on the converted amount now at a known rate, allowing future growth and qualified withdrawals to be entirely tax-free for you and your beneficiaries, without RMDs (required minimum distributions) during your lifetime.
  • Tax-efficient withdrawal sequencing: Advising on the optimal order to withdraw funds from taxable accounts (e.g., brokerage accounts), tax-deferred accounts (e. g., traditional IRAs), and tax- free accounts (e g., Roth IRAs). This “decumulation” strategy can help lower your lifetime tax bill and extend the longevity of your portfolio.
  • Qualified Charitable Distributions (QCDs): For clients who are over age 70½ and have a charitable inclination, we can facilitate directing RMDs from an IRA directly to a qualified charity. This satisfies your RMD requirement and does not count as taxable income for you, which is a powerful tool for reducing your adjusted gross income.
  • Beneficiary Designation Planning: We provide counseling on the tax implications of your beneficiaries. The SECURE Act has changed the rules regarding non-spousal beneficiaries, requiring them to withdraw all funds from an inherited IRA within 10 years. We help structure beneficiary designations and explore trusts to manage this potential tax liability for your beneficiaries.
  • Louisiana-Specific Considerations: We take into account Louisiana’s tax laws, including its income tax treatment of retirement income and applicable exemptions for seniors. We ensure that your plan is optimized to minimize both federal and state taxes.

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Integrating Tax Planning with Your Overall Estate Plan

Retirement tax planning is not a standalone process. It is an essential part of a comprehensive estate plan. The decisions you make regarding your retirement accounts now will directly impact the size and tax efficiency of your legacy in the future. We ensure that your tax strategy aligns with your wishes, trust structures, and healthcare instructions, creating a cohesive plan that will work seamlessly throughout your lifetime and beyond.

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Secure Your Retirement Vision with Confidence

You’ve earned the right to a retirement that is based on security and choice, not uncertainty and excessive taxation. At Losavio & DeJean, LLC, we offer experienced legal advice to help you navigate the complicated intersection of tax laws and retirement planning. Let us assist you in creating a personalized strategy to reduce your tax burden, increase your income, and protect your hard-won assets for future generations. Contact our Baton Rouge office today to arrange a consultation and take charge of your financial future during retirement.

Common Tax Planning FAQs

Why do I need a specialized attorney for retirement tax planning?

Retirement tax laws are complex and intersect with estate planning, Social Security, and Medicaid rules. A misstep can trigger unnecessary taxes or affect your eligibility for benefits. Our elder law attorneys bring over 40 years of focused experience in these areas. We create integrated strategies that minimize your overall tax liability while preserving your assets for your care and your heirs, providing a comprehensive approach that a general accountant may not offer.

How are withdrawals from my retirement accounts (like 401(k)s and IRAs) taxed?

Withdrawals from traditional, tax-deferred retirement accounts are treated as ordinary income and taxed at your current income tax rate. Required Minimum Distributions (RMDs) that begin at age 73 (under current law) are a key consideration. Strategic planning can help manage the tax impact of these withdrawals, potentially by timing them or converting portions to Roth accounts in lower-income years to reduce future taxable income.

Can I still owe income tax if I’m retired?

Absolutely. Retirement often involves multiple income streams, each with potential tax implications. This can include Social Security benefits (which may be partially taxable), pension payments, part-time work income, and earnings from investments or hobbies. A proactive plan helps you understand the taxability of each source and structure your withdrawals and activities to keep you in the most favorable tax bracket possible.

What is capital gains tax, and how might it affect me in retirement?

Capital gains tax is levied on the profit from the sale of an asset like stocks, bonds, or real estate. In retirement, you may sell investments to generate income or downsize your home. Strategic planning, such as utilizing the primary home residence exclusion (which can exempt up to $250,000/$500,000 of gain) and managing the timing of asset sales, is crucial to minimize this tax and maximize your proceeds.

How does retirement tax planning integrate with my overall estate plan?

They are deeply connected. The way your retirement accounts are structured—such as beneficiary designations—directly impacts both the income tax your heirs will pay and the overall value of your estate. We coordinate your tax-deferred account strategies with your will, trusts, and legacy goals to ensure a tax-efficient transfer of wealth, avoiding common pitfalls that can leave beneficiaries with a large, unexpected tax bill.

Is it too late for tax planning if I’m already retired?

It is never too late to optimize your situation. While the most benefit comes from starting early, significant opportunities exist at any stage. Life changes like receiving an inheritance, selling property, or adjusting withdrawal strategies offer chances to implement planning that can reduce your tax burden, protect your assets from long-term care costs, and improve your financial security for the years ahead.

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