IRS Tax Brackets and Tax Bracket Management

2021 Tax Table

2021 Standard Deduction

 

 

 

 

Keep in mind that if and when you withdraw that money from the IRA, the withdrawn amount is 100% subject to income tax at whatever the prevailing income tax rates are at that time.

As for when to take money out of your IRA if you’re looking to protect it using the Living Trust Plus®, 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 fell from 39.6% to 37%, while the 33% bracket dropped to 32%, the 28% bracket to 24%, the 25% bracket to 22%, and the 15% bracket to 12%. The lowest bracket remained at 10%, and the 35% bracket was also unchanged. However, these changes are temporary, set to sunset at the end of 2025, and might increase as early as 2022.

Tax Bracket Management:

Using the above chart, with optimal tax bracket management, a married couple currently earning $81,051 per year (ignoring RMDs) is in the 22% tax bracket, meaning that all income withdrawn from a qualified retirement account such as an IRA or 401(k) will be taxed at a minimum rate of 22%.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 would involve withdrawing an additional $248,800 in order to bring their income to the top of the 24% tax bracket, thus locking in the extremely low 24% tax rate. The money withdrawn could then be used to fund a Roth IRA or to put this money into the Living Trust Plus® Asset Protection Trust.

The financial strategy examples 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.

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.

2021 Medicare Part B Premiums By Income

The standard Part B premium amount in 2021 is $148.50. If your modified adjusted gross income, as reported on your IRS tax return from 2 years ago, is above $88,000 for an individual, or above $176,000 for a jointly filing household, then the IRMAA (Income Related Monthly Adjustment Amount) assessment increases the 2021 Part B and Part D premiums to the amounts shows in Tables below:

Individual

Joint

Monthly Premium

$88,000 or less

$176,000 or less

$148.50

> $88,000 – $111,000

> $176,000 – $222,000

$207.90

> $111,000 – $138,000

> $222,000 -$276,000

$297.00

> $138,000 – $165,000

> $276,000 – $330,000

$386.10

> $165,000 – $500,000

> $330,000 – $750,000

$475.20

Greater than $500,000

Greater than $750,000

$504.90

Source: CMS

2021 Medicare Part D Premium By Income

Individual

Joint

Monthly Premium

$88,000 or less

$176,000 or less

Your Plan Premium

> $88,000 – $111,000

> $176,000 – $222,000

$12.30 + your plan premium

> $111,000 – $138,000

> $222,000 -$276,000

$31.80 + your plan premium

> $138,000 – $165,000

> $276,000 – $330,000

$51.20 + your plan premium

> $165,000 – $500,000

> $330,000 – $750,000

$70.70 + your plan premium

Greater than $500,000

Greater than $750,000

$77.10 + your plan premium

Source: CMS

The financial strategy examples 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.

Print Friendly, PDF & Email

Thank you for your upload