All hypothetical illustrations contained in this guide are for illustrative purposes only. We recommend that you consult with your financial advisor for an income strategy that is right for your individual circumstances.
Withdrawal assumptions for tax-defered, assumes the full withdrawal is taxed at ordinary income tax rates. For taxable, assumes most taxation occurred during accumulation, so only 25% of the withdrawal is taxed, and taxed at long-term capital gains tax rates. For tax-free, assumes the requirements are met for tax-free income.
Neither RiverSource Life Insurance Company, nor RiverSource Life insurance Co. of New York, nor their affiliates or representatives, offer tax or legal advice. Consult with your tax adviser or attorney regarding your specific situation.
Insurance and annuity products are issued by RiverSource Life Insurance Company and in New York, by RiverSource Life Insurance Co. of New York, Albany, New York. These companies are affiliated with Ameriprise Financial Services, Inc. Only RiverSource Life Insurance Co. of New York is authorized to sell insurance and annuities in New York.
© 2016-2019 RiverSource Life Insurance Company. All rights reserved.
The last thing you want to discover once you’ve retired is that you have less income than you’d planned, because you didn’t consider the impact of taxes.
Use this guide to help determine if your current investment plan is tax-diversified and see how making adjustments may help you optimize your retirement income and pay less taxes.
Our tax-efficient retirement income (TERI) guide:
© 2016-2019 RiverSource Life Insurance Company. All rights reserved.
The Ameriprise Financial Confident Retirement® approach breaks retirement planning down into doable steps to take the uncertainty out of facing your future. We can offer practical advice and solutions to cover your expenses, ensure your lifestyle, prepare for the unexpected and leave a legacy.
The Ameriprise Financial Confident Retirement® approach
© 2016-2019 RiverSource Life Insurance Company. All rights reserved.
There are 3 main categories you can contribute to from a tax perspective when saving for retirement. For most clients we recommend a mixture to provide tax diversification.
This information is being provided only as a general source of information, and is not a solicitation to buy or sell the securities mentioned. The information is not intended to be used as the sole basis for investment decisions, nor should it be construed as advice designed to meet the particular needs of an individual investor.
Investment products are not federally or FDIC-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value.
© 2016-2019 RiverSource Life Insurance Company. All rights reserved.
Moderate
Choose a rate of return from 1% up to 6%. Assumes a portfolio of half equity and half fixed income. Returns for the taxable portfolio assume 75% of the portfolio’s annual return is taxed currently with a 40% exposure to ordinary income and 60% exposure to long-term capital gains. The remaining 25% of the portfolio is not subject to current taxation but assumed to be deferred until withdrawn or sold.
Tax Description
The tax rates while accumulating represent the federal income tax bracket plus “Other” income taxes. The federal tax bracket affects the ordinary income tax rate and corresponding long-term capital gains rate that is applied to earnings during Accumulation (Taxable Portfolio only).
The federal tax rates shown below are based on taxable income which is generally gross income after deductions (including itemized deductions) and personal exemptions. A tax advisor can help determine the appropriate tax rates.
"Other" is available to capture state and local taxes, city, net investment income tax or other taxes you would like reflected in the assumptions. Include your relevant state income tax rate related to your state of residence. The additional federal tax of 3.8% on net investment income can be included here, if applicable.
IMPORTANT: You must enter an actual state income tax rate that is applicable to your individual circumstances (maximum tax rate within this tool is 17%). In order to obtain meaningful hypothetical calculations, you should not enter a rate that does not accurately reflect your state income tax rate. Please consult with your tax attorney or CPA, as necessary to obtain your appropriate tax rate.
| 2019 Federal Tax Rate | Single | Head of Household | Married Filing Jointly | Married Filing Seperately |
|---|---|---|---|---|
| 10% | $0 - $9,700 | $0 - $13,850 | $0 - $19,400 | $0 - $9,700 |
| 12% | $9,701 - $39,475 | $13,851 - $52,850 | $19,401 - $78,950 | $9,701 - $39,475 |
| 22% | $39,476 - $84,200 | $52,851 - $84,200 | $78,951 - $168,400 | $39,476 - $84,200 |
| 24% | $84,201 - $160,725 | $84,201 - $160,700 | $168,401 - $321,450 | $84,201 - $160,725 |
| 32% | $160,726 - $204,100 | $160,701 - $204,100 | $321,451 - $408,200 | $160,726 - $204,100 |
| 35% | $204,101 - $510,300 | $204,101 - $510,300 | $408,201 - $612,350 | $204,101 - $306,175 |
| 37% | $510,300+ | $510,300+ | $612,350+ | $306,175+ |
Enter current values of your accounts and annual contribution.
You can make changes to where you are currently saving by adjusting the
sliders below.
You can increase your current savings in any category
under additional contributions on the left.
Adjusted
Values
| Original Contributions | Illustrated Contributions | |
|---|---|---|
| Tax-free | $0 | $0 |
| Taxable | $0 | $0 |
| Tax-deferred | $0 | $0 |
| Total | $0 | $0 |
© 2016-2019 RiverSource Life Insurance Company. All rights reserved.
You have a number of ways to increase tax efficiency when withdrawing retirement income savings. For example, by layering income by its source to align with tax brackets retirees can create more net cash flow in retirement. Also, some situations may benefit from accessing certain types of assets earlier in retirement and postponing the use of other assets until later in retirement.
© 2016-2019 RiverSource Life Insurance Company. All rights reserved.
Net Income from retirement values
VALUE
Original Contributions
VALUE
Illustrated Contributions
In this hypothetical example we are assuming a withdrawal of 4% from each account on an annual basis.
Compare the net income from values based on original contributions versus illustrated contribution.
For more information click here
The calculation is based on the tax rates entered previously in the Assumptions section.
For tax-deferred, assumes the full withdrawal is taxed at ordinary income tax rates. For taxable, assumes most taxation occurred during accumulation, so only 25% of the withdrawal is taxed, and taxed at long-term captial gains tax rates. For tax-free, assumes the requirements are met for tax-free income.
The calculation is based on the tax rates entered previously in the Assumptions section.
For tax-deferred, assumes the full withdrawal is taxed at ordinary income tax rates. For taxable, assumes most taxation occurred during accumulation, so only 25% of the withdrawal is taxed, and taxed at long-term capital gains tax rates. For tax-free, assumes the requirements are met for tax-free income.
Calculates the gross withdrawal needed to net the retirement withdrawal entered after tax.
Enter a retirement withdrawal to see the potential effect of income tax.
Click on either Tax-deferred, Tax-free or Taxable to see the effect on Income.
Withdrawal needed to net $1.00 after tax
| $0 | $0 | $0 |
| Tax-deferred | Taxable | Tax-free |
Retirement can offer many new opportunities to enjoy new adventures or start new endeavors. Having a smart place to access money to help pay for these is important.
The income tax you pay in retirement will be determined by where you take withdrawals. Having assets in each category may allow you to have more control over paying additional tax, or avoid moving into a higher tax bracket, by taking money from the most desirable category when needed.
© 2016-2019 RiverSource Life Insurance Company. All rights reserved.
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