On The Money

Tax deferral might not make sense now by Kevin Reardon, CFP, and president of Shakespeare Wealth Management

One major tenet of financial planning over the years has dealt with deferring taxes, both income and capital gains, into the future. The rationale for this has been sound. By deferring taxes into the future, you allow the full corpus of your principal to accumulate faster. This, in turn, allows your nest egg to grow larger than if you had paid the taxes and invested the remaining principle. In addition, the objective has been to incur these deferred taxes during retirement, when your income may be lower, and you are in a lower tax bracket. 

Surprisingly, we are finding a few instances in which clients will benefit from accelerating capital gains or income in 2009 and 2010, which we previously might have deferred.

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