Tax Ramifications

What this video covers

• Why suitability is always the first filter and tax treatment is only the second filter, never a rescue for an unsuitable product
• The exact difference between tax-efficient, tax-deferred, and tax-free, and why an index fund in a taxable account proves they are not interchangeable
• Why reinvested mutual fund distributions create phantom income that is taxable in the year received even though no cash hits the investor's hand
• Why municipal bond funds inside a tax-deferred Individual Retirement Account (IRA) waste the federal tax exemption and are unsuitable
• How variable annuity withdrawals use Last-In, First-Out (LIFO) accounting and ordinary income rates, plus when the 10% early withdrawal penalty applies
• When a 529 plan's tax-free qualified withdrawals become unqualified and trigger the same 10% penalty on earnings
• What an Achieving a Better Life Experience (ABLE) account preserves for beneficiaries, and which account types receive a step-up in basis at death