Taxation of Government Plans

Additional factors to consider:

Government plan income to the participant and any beneficiaries is taxed at full income tax rates. Would I benefit more from a plan that allows my income to be taxed at the lower “capital gains” rates, and be passed to my beneficiaries without tax, instead?

Would I benefit more from a plan that allows income with no income or capital gains tax to me or my beneficiaries? (We can show you one.)

Have I calculated my “loss of use” costs? (The loss of use of my money due to the locks imposed by tax and penalties.) Please return to “The Story of Box A and Box B” for “loss of use”.

We submit that government plans add maximum tax risk to investment risk. They will only provide a benefit when a minimum stream of income is taken over a long life span, neither of which can be assured. The risk of taking the minimum stream of income is that it could leave a balance that is subject to maximum taxation to beneficiaries. The risk of taking a higher income stream is outliving your money. Alternatives that minimize these risks are available. Yet, these factors are not disclosed or discussed by banks or financial planners.

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