Dr. Rastogi provides comprehensive financial planning for every stage of life. Typical plans include Investment planning, Retirement planning, education savings, Estate Planning, and Insurance planning. A brief description of each type is given below,
Savings and Investment Planning is essential for clients at every stage of life. Dr. Rastogi assists clients in strategically saving funds and investing for growth. While gains on investments may be taxable, certain choices, such as investing in municipal bonds, may offer non-taxable gains. A detailed analysis is provided under investment planning.
Retirement Planning – Dr. Rastogi advises starting retirement planning as early as possible. First, self-employed clients should maximize their social security contributions to receive maximum benefits at retirement. Next, clients need to choose the right retirement plan to maximize tax-deferred savings, depending on the business they’ve formed. Detailed information on entity formation is covered under Business Savings. Clients can choose from various retirement plans, including IRA, Roth IRA, SEP IRA, 401 K, 403 K, and 457. Each plan has different contribution limits that change annually. Withdrawal or distributions from a retirement plan before age 59 ½ may incur penalties and taxes. Dr. Rastogi can guide the client in selecting the right plan, determining the contribution amount, and understanding the tax and penalty implications of early withdrawals or distributions.
Education or College Savings: Dr. Rastogi can help clients plan for children’s college education using either a 529 education plan or a Coverdell education plan. Contributions to these plans can grow tax-free for federal and state income taxes. Some states, including Pennsylvania, offer tax-deductible contributions to a 529 plan.
For every client, saving for children’s college education is a significant life goal. Starting a 529 plan at the birth of a child is ideal. Clients typically have about 15 years before they begin withdrawing funds for college—and now for secondary education too. They can withdraw up to $10,000 per child annually for secondary education.
There is no maximum limit for contributions under a 529 plan. However, the annual gift limit applies for parents and grandparents to contributions without incurring gift tax. Detailed information about the Education Savings plan is provided in a separate section.
Estate Planning: Estate planning involves preparing tasks to manage an individual’s assets in the event of incapacitation or death. This includes bequeathing assets to heirs and settling estate taxes. Most estate plans are created with the help of an attorney experienced in estate law.
- Estate planning ensures an individual’s assets are preserved, managed, and distributed after death or in case of incapacitation.
- Planning tasks include drafting a will, setting up trusts, making charitable donations to limit estate taxes, naming an executor and beneficiaries, and arranging funeral plans.
- A will is a legal document that provides instructions on handling an individual’s property and the custody of minor children, if any, after death.
- Various strategies can limit taxes on an estate, including creating trusts and making charitable donations.
Dr. Rastogi can guide clients in finding the right resources for estate planning to help reduce estate taxes. Estate planning can directly impact tax preparation for self-employed clients.
Insurance Planning: There are generally eight types of insurance, with varying premiums. These include life, auto, homeowner’s, liability, disability, health, long-term care, and malpractice insurance. Some can be categorized as business expenses. Details of each are below:
- Life Insurance: Provides funds to beneficiaries after death for living expenses or debt. Costs vary by age, health, gender, and coverage type. Typically, there are no tax advantages unless partners in an LLC purchase each other’s life insurance.
- Auto Insurance: Protects against financial loss from theft or damage to your vehicle. If used for business, it can be a business expense.
- Homeowners Insurance: Covers disaster-related damages like fire, vandalism, or theft. Does not cover earthquake or flood damage—those require separate policies. No tax advantage for personal home insurance.
- Liability Insurance: Covers policyholders after exhausting other liability policies. It can protect business assets and may be tax-deductible.
- Disability Insurance: Replaces lost income if unable to work long-term. It can be a tax-deductible business expense.
- Health Insurance: Covers medical expenses. For self-employed clients, these can be business expenses and impact tax deductions. Dr. Rastogi recommends high-deductible health insurance with HSA accounts, which are tax-deductible at the personal level.
- Long-term Care Insurance: Covers costs of long-term care, usually not covered by health insurance, and offers no tax deductions.
- Malpractice Insurance: Essential for protecting a business from errors and omissions. Tax-deductible as a business expense.
Dr. Rastogi can advise on choosing the necessary insurance policies to reduce taxes, as business-related premiums can be considered business expenses, aiding in tax savings.