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Avoid hidden Tax Triggers when planning for retirement
Jill Perlin
T
ax season is upon us
— but before you
break out that box of
old receipts in search of
every last deduction, think
about whether you’re taking
advantage of all the tax ben-
efits associated with saving
for retirement.
Your nest egg can general-
ly be divided into three cat-
egories, at least from a tax
perspective: assets that are
taxed now, those that carry
special tax advantages, and
those that will be taxed
later.
Assets that are taxed now
include mutual funds,
stocks, and certificates of
deposit. They’re purchased
with after-tax income, and
investors pay short- or long-
term capital gains taxes on
their profits after they sell or
cash in the assets.
These types of assets
carry two hidden tax risks,
too.
The first, turnover, afflicts
investments like mutual
funds. Over the course of a
year, managers buy and sell
securities to ensure that the
fund adheres to its stated
objective and to lock in
gains on securities within
the fund. So if a fund adver-
tises a turnover ratio of 25
percent, then the managers
executed trades that repre-
sented one-quarter of the
fund’s total assets.
Turnover can trigger capi-
tal gains — which investors
must pay taxes on.
The other hidden tax risk
is rebalancing. Many people
sell assets that have grown
in value and then buy secu-
rities whose value has
decreased in order to bring
their overall asset allocation
back into balance.
For instance, if mutual
fund A jumps in value while
mutual fund B plunges, then
fund A will comprise a
greater percentage — and
fund B a lesser share — of
an investor’s portfolio.
Selling A and buying B can
allow an investor to position
ing on tax-advantaged and
tax-deferred savings vehi-
cles? That is arguably the
single-best way to take con-
trol of your tax risks. It also
has the salutary effect of
maximizing your retirement
Are you needlessly paying
taxes now on income that you
may not actually use until
sometime in the future?
his portfolio in line with its
original
strategy.
Unfortunately, the gains on
the sale are taxable.
With these risks in mind,
it’s worth asking yourself
whether you’re needlessly
paying taxes now on income
that you may not actually
use until sometime in the
future.
In short, are you capitaliz-
income.
Tax-advantaged assets
include such vehicles as
Roth Individual Retirement
Accounts (IRAs). Investors
contribute to a Roth IRA
with after-tax income but
can typically withdraw their
money — including any
gains — tax-free as long as
they comply with certain
requirements.
On the downside, the
assets within a retirement
account are subject to the
vagaries of the market.
Savers are also subject to
income and contribution
limits when using Roth
IRAs.
Traditional IRAs, quali-
fied retirement plans like
401(k)s, cash-value life
insurance, and annuities
represent types of assets that
are taxed later. Some of
these savings vehicles
require a saver to withdraw
a portion of the funds once
he reaches a certain age.
When withdrawn, the pro-
ceeds are generally taxed as
regular income.
Of this third category,
annuities provide savers
with the greatest flexibility.
Holders of annuities can
control their tax burden, as
they don’t pay taxes on any
earnings until they with-
draw funds. They also have
access to professionally
managed
investment
options and can avoid the
tax risks associated with
rebalancing their portfolios.
Further, annuities are the
only vehicle that can pro-
vide savers guaranteed
retirement income that’s
insulated from potential
market downturns, while
leaving the possibility of a
death benefit for an
investor’s heirs.
Of course, the tax treat-
ment of an asset is just one
criterion for evaluating an
investment, and assets of all
kinds merit inclusion in a
saver’s portfolio. But as you
prepare your taxes this year,
consider how you might be
able to benefit from tax-
advantaged
and
tax-
deferred savings vehicles.
Jill Perlin is vice presi-
dent of client effectiveness
and education at Prudential
annuities.
ENERGY EDUCATION COORDINATOR
Mental Health & Addiction Services
LEARNING GARDENS
PROGRAM COORD
ACUTE CARE COORDINATOR
Full-time, part-time, on-call
Recruitment #6365-74
Visit our website at:
www.multcojobs.org
or call (503) 988-5035.
4-6-11
Manage, evaluate and adapt a volunteer-taught garden
education program. Complete posting, job description
and application (available at www.oregonfoodbank.org).
Submit application by email or to Oregon Food Bank, PO
Box 55370, Portland, OR 97238-5370. Deadline
4/14/11. Equal Opportunity Employer.
4-6-10
The Housing And Community Services Agency (HACSA)
of Lane County is accepting applications for a full-time
Energy Education Coordinator (EEC). Salary range
$2,708.25 to $3,854.30/month. We’re seeking a highly
motivated individual who is passionate and knowledge-
able about energy conservation, has great people skills,
and is capable of achieving success delivering an inter-
active energy education program working in a wide array
of environments with a diverse population of low-income
families and students throughout Lane Co. Posting &
application can be obtained at www.hacsa.org or at 177
Day Island Rd, Eugene, or by calling 541-682-2523;
TDD 541-682-3412. Completed application packet must
be received by 4:00 PM, April 15, 2011. EOE/ADA
4-6-10
STREET SWEEPER OPERATOR
Automotive Equipment Operator II
WAREHOUSE/RECEIVING
Portland Bureau of Transportation
Recruitment No. 11-037
Hourly Wage: $20.59 at entry to $24.80 after one year
This is skilled work operating a 3- or 4- wheeled street
sweeper and large trucks with auxiliary snowplows. The
work is often done in heavy traffic, may be either day or
night shift, and may require working on Saturday or
Sunday, holidays, emergencies, or under extreme snow
and ice conditions.
Applicants must possess:
• Skill in the safe and effective operation of large and
complex street sweepers.
• A valid Commercial Driver's License (CDL-Class A)
with Tanker Endorsement and acceptable driving
record.
Applicants must pass skill evaluations and interviews,
and be prepared to sign a criminal conviction statement
and pass a medical evaluation.
Complete application packets must include:
• City of Portland Scannable Application Form
• Supplemental Application Job Features Checklist
(sections A & B).
You may submit your application on-line at
http://www.portlandoregon.gov/jobs/ but Emailed or
Faxed applications will not be accepted.
Or apply in person at
Portland Bureau of Human Resources
Application Center, Portland Bldg. Lobby, NE Corner,
1120 SW 5th Avenue, Portland, OR 97204
Deadline: 4:30 PM, Monday, April 18, 2011.
Minorities, women, and qualified individuals with
disabilities are urged to apply.
4-6-10
for non-profit food distribution agency. Responsible for
receiving, sanitation & safety. Able to repeatedly lift 50
lbs & obtain forklift certification. Pay range depends on
exp. Job description posted on website www.oregon-
foodbank.org. Complete application by 4/15/11 at
Oregon Food Bank, 7900 NE 33rd Drive, Portland, OR
97211. Equal Opportunity Employer.
4-6-10
CITY OF CAMAS,
WA
SEASONAL
PARKS AND
RECREATION
WORKERS
Deadline: 5pm,
April 11, 2011
Facilities & Planning
ASSOCIATE PROJECT MANAGER
Facilities & Planning seeks FT Associate Project
Manager to oversee construction projects that create,
repair, remodel, maintain or preserve physical assets
and utility systems at Portland State University. Oversee
planning, design & construction of small to medium
Capital construction & repair projects. Consult w/FAP
Director & staff to hire & direct the work of design con-
sultants & construction contractors to execute project
work in its entirety. Salary range for this position is
$58,000-$63,000 plus EXCELLENT benefits package.
PSU is an AA/EO institution. TO APPLY: Please read the
job qualification in the full announcement & apply online
at www.hrc.pdx.edu/openings/unclassified/index.htm.
PSU Human Resources is located at Market Center
Building, 1600 SW 4th Ave, Ste. 518, 503-725-4926.
The City of Camas is hir-
ing seasonal workers to
work as lifeguards, pool
aides, water safety
instructors and recre-
ation program aides.
These are seasonal
positions and there are
no benefits.
Application and position
descriptions available
online at
www.ci.camas.wa.us/ad
min/jobs.htm
4-6-11
4-6-10
april 6, 2011 The Seattle Skanner Page 7