Category: Accumulation

The Staggering Impact of Taxes On Investment Returns

The purpose of this post is not to make any kind of political statement.  We are not trying to say one side is right or one side is wrong.  The purpose of this post is to simply show mathematically something that politicians should understand.  More importantly, you as a financial professional should understand this because the impact of taxation on our wealth is significant – significant enough that positioning our money in a tax-advantaged situation is one of the most competitive advantages possessed by whole life insurance. To illustrate the

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How do you include the state income tax for capital gains tax?

Increase your capital gains rate box by the state income tax rate. Increase your state income tax rate is 7% and your clients’ federal capital gains tax rate is 15%, then you’ll put 22% in your capital gains rate box. Please note: there is not a federal capital gains tax deduction for the state income tax paid as there is for federal income tax.  See the calculation below: This first part the software handles automatically. INCOME TAX [ezcol_1half]Federal Income Tax Rate  Federal Capital Gains Tax Rate State Income Tax Rate [/ezcol_1half]15%  15%  7% [ezcol_1half_end][/ezcol_1half_end]

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Truth Tip: Comparing Taxable vs. Tax-Deferred Accounts

We received this excellent question from a Truth Concepts user this week: Q. I am trying to do a comparison between using a qualified plan and a non-qualified plan.  I understand pretty well how to use the Qualified Plan calculator, however I want to show an “apples to apples comparison” assuming everything else is equal i.e. ROR, management fee, etc., but with the client paying taxes each year on their investment gains, so that at retirement the money they have to spend is tax free. A. That will be easiest

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Accumulation

When filling in the tax box on the right for Mutual Funds, the following guidance and definitions will be helpful.  Remember to get this tax box, the “MF?” box on the left must be checked.  This means the existing money plus any new payments will be taxed like a mutual fund.  To fill in the box, you’ll use 3 percentages that must equal 100%, for example, 20% + 30% + 50%.  Unrealized Long Term Capital Gains means the percent of the funds’ growth that “fell off the fund managers desk”

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Truth Tip Accumulation

The Accumulation Calculator shows the effectiveness of money growing (taxable, tax deferred, tax deductible and/or tax free) and it has multiple variable payment and withdrawal columns, the ability to vary the earnings rate, and to add term insurance and  other costs.  In this calculator you can create an exact copy of existing information currently in the calculator by pushing the “Duplicate” button on the top left.  PINK box means column showing but no #’s.  YELLOW box means #’s but no column showing.  BLUE box means #’s in the column and its

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