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It's Time For The Tax Talk

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5 Little Known Facts About Your 401k

January 17, 2023

Taxes can take a big bite out of an investment portfolio. Over time income withheld for taxes can reduce returns and significantly impact an investor's long-term investment strategy.

The more money you earn, the more you pay in taxes. Fair? Maybe, maybe not. What's certain is that there is no indication of tax rates getting any lower and a good chance that they will go up in the future. And when you add in increasing nonqualified investments that kick off dividends and capital gains, you could be losing investment earnings to taxes. Most people are not even aware that Mutual Funds can kick off phantom capital gains. Over looking the role taxes play in your long term investing strategy can derail your success.

When preparing for retirement, investors want their investments to grow so they can draw an income from it when they stop working. The standard is to contribute to a company 401K or IRA and then anything extra go into a taxable non-retirement account. Making a contribution into a ROTH IRA is a great choice, but more and more workers are getting phased out due to income limitations.

So how do we partially take taxes out of the equation? Turning to tax-deferred vehicles is a way to avoid taxes today and control your income stream in the future. In a study by TIAA-CREF, 84 percent of the respondents claim that receiving a monthly paycheck during retirement is important to them; yet only 14 percent of Americans have purchased a tax deferred annuity. An annuity can keep you invested in the market while limiting the tax exposure. By keeping more assets invested over time, helps your money work smarter for the long run.

Market environments, tax laws, and interest rates will always change, but easing the tax bite is a great way to provide more success to your retirement goal.


If you would like to receive more information on making smart money moves for your future, be sure to contact us today!

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3 Money Moves For 2023

About the author

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Van Pappas

Vice President, Private CFO®

Van Pappas, CFP® - Van is a native of Atlanta. He holds his undergraduate degree in Finance with an emphasis in Real Estate. As a planner for 15 years, he earned his CFP designation from Kaplan University. He is currently the Chairman and founder of the Chamblee Chamber of Commerce and sits on the Downtown Development Authority for the City of Chamblee. In 2012, he noticed the value of helping the X-Y Generations and decided to merge his practice with oXYGen Financial.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice. Investor Disclosures: https://bit.ly/KF-Disclosures

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

Background and qualification information is available at FINRA's BrokerCheck website.

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Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice. https://Bit.ly/KF-Disclosures

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