Russ and Beth's Story

"These taxes are killing us!"

That's what Russ and Beth proclaimed when they came in for their quarterly strategy review.

Both in their 70s, they couldn't understand why they were paying so much more on their tax return than they had previously. They understood they had some capital gains from selling securities, but didn’t see how that could trigger such a high tax. They asked the team at ChappelWood to investigate.

Very quickly after reviewing their tax return, we spotted the problem. They were taking far more than the Required Minimum Distributions from their tax deferred accounts. This dramatically increased their taxable income, and subjected more of their Social Security benefits to taxation. Meanwhile, they had $100,000 in cash in the bank, earning nothing and going unused.

The solution was simple. We adjusted the flow of cash from the tax deferred accounts to just the minimum required. We made up the difference with cash from the bank, and strategically took dividends and long term capital gains from their investments. We were able to reduce their taxable income, including Social Security, and saved them more than $6,000 in annual taxes.

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