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How To Avoid Unwanted Tax Surprises From Non-Qualified Accounts

How To Avoid Unwanted Tax Surprises From Non-Qualified Accounts

If you have a traditional retirement plan at work, it is most likely a qualified plan, like a 401(k), 403(b), SIMPLE or SEP IRA. A non-qualified account is money you've already received through income sources and paid income tax on it, but the gains are subject to taxes in the future. Your savings account at Chase Bank earning 0.01%-0.02% APY is a non-qualified account, as is your brokerage or trust account, deferred-compensation plan, executive bonus plan, or split-dollar life insurance. 

No one likes to receive a large surprise tax bill, and without advanced planning, non-qualified portfolio income can sneak in for quite an unpleasant shock. 

Interest, dividends, and capital gains affect your adjusted gross income (AGI), and it's important to factor this in when properly addressing your tax planning needs.

By reviewing the taxable non-qualified account(s) income checklist linked below, you can gain a comprehensive understanding of your options to coordinate the taxable income in your non-qualified portfolio with other tax planning goals, providing you with a sense of reassurance about your financial planning.

This checklist covers important factors when reviewing your non-qualified portfolio income, such as:

  • Taxable interest
  • Tax-exempt interest
  • Ordinary and qualified dividends
  • Realized long- and short-term capital gains/losses
  • Unrealized long- and short-term capital gains/losses
  • Tax loss carryforwards from prior years
  • Anticipated capital gains distributions from mutual funds

Taxable Non-Qualified Account(s) Income Checklist

For more than two decades, the advisors at Hurlow Wealth Management Group have helped clients prepare for non-qualified income distributions and avoid uncomfortable surprise tax bills. Schedule an introductory call today if you want guidance in managing taxable expectations. 

Services offered through Hurlow Wealth Management Group, Inc., a Registered Investment Adviser. Hurlow Wealth Management Group, Inc. does not provide tax, legal or accounting advice.  Advisory services are only offered to clients or prospective clients where Hurlow Wealth Management Group, Inc. and its representatives are properly licensed or exempt from licensure.  Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Hurlow Wealth Management Group, Inc. unless a client service agreement is in place. 
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