Ronald Fatoullah & Associates - Elder Law

Estate planning and retirement fund contributions

401k small.jpg

Tax difficulties are the last thing anyone will wish to encounter during their retirement years. But with current rules regarding income calculation, expense deductions, and minimum withdrawals from retirement accounts, elderly individuals often make mistakes when it comes to filing taxes.

A few months ago, Forbes published an article warning about individuals stashing too much of their finances into 401(k)s. The article states that the IRS may be targeting such individuals for audits. As such taxpayers are purportedly saving more than is allowable, the treasury department was supposedly suffering a shortage of money.

The Treasury Inspector General for Tax Administrator (TIGTA) recommended education for IRS employees. There was also the suggestion of stepping up target audits for those with excess 401(k) deferrals. Such targeting would focus upon individuals with multiple 401(k)s.

Ways to save on taxes

There are numerous recommendations for saving on taxes during retirement. Google "taxes and retirement" and you will see dozens of articles on this specific topic. A recent Money magazine article, for example, gives seven pieces of advice. Unfortunately, such suggestions are often easier said than done.

Many retirees have specific financial needs that will limit their financial options. Also, advice one finds online may not be accurate or could lead to misunderstandings. For example, few retirees understanding that failing to take minimum distributions from a retirement account leads to tax consequences. And there are also several tax deductions senior citizens may not know.

Trying to understand the complex rules

It is easy to make a mistake when entering information concerning 401(k) contributions on tax forms. It's possible to make an error due to a contribution appearing greater than it actually was. And discovering such an error could be difficult unless someone keeps a close eye on pay stubs and the amount of contributions. Missing a deadline only makes the situation worse. That excess contribution could become taxable income for the following year due to a missed filing deadline.

We've said many times that tax considerations are essential when creating an estate plan that meets your needs. But understanding your options could require the skills and handling of an experienced estate planning attorney who understands the tax laws. Mistakes can be extremely costly for you and your family.

No Comments

Leave a comment
Comment Information

Smart, Caring Strategy For Seniors: Call 516-466-4422.

Email Us For A Response

Looking For Answers?

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Great Neck
60 Cuttermill Road
Ste 507
Great Neck, NY 11021

Phone: 212-257-0195
Fax: 1-516-466-2219
Great Neck Law Office Map

7 Penn Plaza
Ste 1602
New York, NY 10001

Phone: 718-690-9066
Map & Directions

80-02 Kew Gardens Road
Suite 307
Kew Gardens, NY 11415

Phone: 718-690-9066
Map & Directions

466 Central Ave
Cedarhurst, NY 11516

Phone: 718-690-9066
Map & Directions

16 Court Street
Suite 1800
Brooklyn, NY 11241

Phone: 917-336-0208
Map & Directions

Phone: 516-466-4422 Fax:1-516-466-2219