Asset Protection Peace of Mind Assessment Tool
If you have significant assets in Retirement Account (i.e., an IRA or qualified retirement account, such as a 401(k), Thrift Savings Plan, or qualified annuity) and are trying to determine whether to withdraw some or all of those funds and transfer the after-tax funds into a Living Trust Plus® Asset Protection Trust, please use our Asset Protection Peace of Mind Assessment Tool to help you discern the value you place on the peace of mind that comes from asset protection as opposed to keeping the money in a Retirement Account that will eventually be subject to taxation.
2025 IRS Federal Tax Brackets – this will not be visible as the table already has this title
2025 Federal Income Tax Brackets
| 2025 Tax Rate | Single | Married Filing Joint |
|---|---|---|
| 10% | $0 to $11,925 | $0 to $23,850 |
| 12% | $11,925 to $48,475 | $23,850 to $96,950 |
| 22% | $48,475 to $103,350 | $96,950 to $206,700 |
| 24% | $103,350 to $197,300 | $206,700 to $394,600 |
| 32% | $197,300 to $250,525 | $394,600 to $501,050 |
| 35% | $250,525 to $626,350 | $501,050 to $751,600 |
| 37% | $626,350 or more | $751,600 or more |
Source: IRS
2025 Standard Deduction – this will not be visible as the table already has this title
2025 Standard Deduction
| Filing Status | Deduction Amount |
|---|---|
| Single | $15,000 |
| Married Filing Joint | $30.000 |
Retirement Account Withdrawals to Fund Your Living Trust Plus® Asset Protection Trust
If and when you withdraw money from a Retirement Account (i.e., an IRA or qualified retirement account, such as a 401(k), Thrift Savings Plan, or qualified annuity), all of the withdrawn amount is subject to income tax in the year of withdrawal at whatever the prevailing income tax rates are at that time. If you die owning a Retirement Account, the general rule is that your children have 10 years to withdraw all of those funds and pay taxes on those withdrawals at the then-prevailing tax rates based on their total income, including all taxable distributions from the Retirement Accounts they inherit from you.
If you’re considering taking money out of a Retirement Account to protect the after-tax funds using the Living Trust Plus® Asset Protection Trust, please keep in mind that as a result of the Tax Cuts and Jobs Act (TCJA) that was signed into law on Dec. 22, 2017, the top income tax rate dropped from 39.6% to 37%, while the 33% bracket dropped to 32%. Most importantly for most people, the 28% bracket dropped to 24% and the 25% bracket dropped to 22%. Also, the 15% bracket dropped to 12%. The lowest bracket remained at 10%, and the 35% bracket was also unchanged. These changes were originally temporary, set to expire at the end of 2025, but OBBBA extended them indefinitely. Whether these historically low tax brackets actually stick around forever is of course unknown.
If you have significant assets in an IRA or qualified retirement account and are trying to determine whether it makes sense to withdraw some or all of those funds and to protect the after-tax amount in Living Trust Plus Asset Protection Trust, please use our Asset Protection Peace of Mind Assessment Tool to determine the relative value you place on the peace of mind that asset protection can give you versus keeping the money in a Retirement Account that will eventually be subject to taxation.
Tax Bracket Management Strategies
For people already in the 22% tax bracket, all income withdrawn from a qualified retirement account such as an IRA or 401(k) will be taxed at a minimum rate of 22%. Optimal tax bracket management might involve withdrawing funds from your qualified retirement account(s), potentially over several years, in order to bring your income to the top of the 24% tax bracket, thus locking in the low 24% tax rate. The money withdrawn could then be used to fund a Roth IRA (there are no limits on these types of “back-door” Roth contributions) or, often better for our Level 3 clients, to put this money into the Living Trust Plus® Asset Protection Trust.
Here’s a simple Tax Bracket Calculator that will calculate your top tax bracket and, more importantly, your “effective tax rate,” also called, as shown in this calculator, your “Tax as % of Income.” This effective tax rate takes into account that the U.S. tax system is progressive and that your highest tax bracket is not the percentage of tax you pay on all your income; rather, all income below your highest tax bracket is taxed in their respective lower tax brackets.
The strategic tax bracket management strategies discussed above are not financial advice and are not intended to be used as the sole basis for financial decisions. Financial advice and specific strategies must be designed to meet the particular needs of your specific situation. Numerous factors should always be considered, in consultation with your attorney, your financial advisor, and your CPA, and tailored to your specific goals and the relative weight or value you assign to each specific goal. There is often no single “best” solution that will achieve all of your goals.
For example, the goals of most people are to (1) protect your assets from lawsuits and nursing home expenses, (2) pay as little as possible in taxes, (3) pay as little as possible in legal fees and accounting fees, and (4) pay as little as possible for your Medicare premiums. All of these are valid and important goals, but all of these goals cannot be maximized at the same time because, for example, protecting your assets involves paying attorney’s fees (e.g. to prepare the Asset Protection Trust and related documents) and possibly additional accounting fees (e.g. to file an additional tax return each year) and may involve paying more in taxes if you cash out funds from a retirement account to put after-tax money into a Living Trust Plus to gain the peace of mind of asset protection*, and increasing your taxes may also increase your Medicare premium two years later due to IRMAA (more on this below).
* How do you value “peace of mind”? There’s no easy answer — but we’ve done our best to help you figure this out — please use our Asset Protection Peace of Mind Assessment Tool to help determine the value you place on the peace of mind that asset protection provides you versus keeping the money in a Retirement Account that will eventually be subject to taxation.
Therefore, no single goal can drive your decisions. For example, paying our legal fees to prepare your Asset Protection Trust and related documents, which also requires the filing of an extra annual tax return, may seem expensive at first. However, you have to weigh that cost against the asset protection and peace of mind that you’ll be achieving — protecting your assets from the expense and nightmare of probate and the potentially catastrophic exposure to lawsuits and nursing home expenses. Similarly, taking withdrawals from your IRA to put the after-tax funds into an asset protection trust requires paying taxes now that you could defer and pay later (or force your kids to pay later, quite possibly at higher tax rates), but this might make sense if you put greater weight on your long-term asset protection goals than your short-term tax goals. Paying modest legal and accounting fees that go along with asset protection typically provides tremendous peace of mind in addition to actual protection in the event you are sued or wind up needing nursing home care. Each person must focus on the whole picture and all of their goals in order to decide which strategy or combination of strategies best serves their purposes.
Tax Brackets Prior to 2016- this will not be visible as the table already has this title
Tax Brackets Prior to 2016
| 2016 Tax Rates | Current Tax Rates | 2026 Tax Rates |
|---|---|---|
| 10% | 10% | 10% |
| 15% | 12% | 15% |
| 25% | 22% | 25% |
| 28% | 24% | 28% |
| 33% | 32% | 33% |
| 39.6% | 37% | 39.6% |
Of course, no one knows what tax rates will be in the future, but it’s important to understand that income tax rates are currently at their lowest in our country’s history.
Medicare Part B and Part D Premiums Based on MAGI and IRMAA
The standard and adjusted Part B and Part D premium amounts are shown below. If your Modified Adjusted Gross Income, as reported on your IRS tax return from 2 years ago, is above the threshold, then the IRMAA (Income Related Monthly Adjustment Amount) assessment increases your Total Part B premium to the amount shown in the table below:
What You Pay in 2025 (Based on Your Modified Adjusted Gross Income in 2023)
Medicare Part B and Part D Coverage with IRMAA Based on MAGI
| Individual MAGI Per Tax Return 2 Years Prior | Joint MAGI Per Tax Return 2 Years Prior | Part B Income-Related Monthly Adjustment Amount | Total Monthly Part B Premium Per Person | Part D Income-Related Monthly Adjustment Amount | Part D Total Monthly Premium Cost per Person |
|---|---|---|---|---|---|
| $106,000 or less | $212,000 or less | 0 | $185.00 | 0 | $46.50 |
| Above $106,000 to $133,000 | Above $212,000 to $266,000 | $74.00 | $259.00 | $13.70 | $60.20 |
| Above $133,000 to $167,000 | Above $266,000 to $334,000 | $185.00 | $370.00 | $35.30 | $81.80 |
| Above $167,000 to $200,000 | Above $334,000 to $400,000 | $295.90 | $480.90 | $57.00 | $103.50 |
| Above $200,000 to $500,000 | Above $400,000 to $750,000 | $406.90 | $591.90 | $78.60 | $125.10 |
| Above $500,000 | Above $750,000 | $443.90 | $628.90 | $85.80 | $132.30 |
Source: CMS 2025 Part B Premiums and Deductibles
The financial strategy examples above are not financial advice and are not intended to be used as the basis for financial or investment decisions. Financial advice and specific strategies must be designed to meet the particular needs of your specific situation.