Tax-Efficient DrawDownTM Strategies

1 Accounts which need to be aggregated for basis recovery Roth IRAs basis out first Traditional IRAs basis pro-rated Accounts which do not need to be aggregated for basis recovery Life insurance basis out first Qualified retirement plans ( 401(k) plan) basis pro-rated Non-qualified deferred annuities (annuitized) basis pro-rated Non-qualified deferred annuities (not annuitized) basis out last 2012 Keebler Tax & Wealth Education All Rights Reserved 2012 Income Tax Brackets Three Main Types of Retirement Investment Accounts Top Ten Tax-Efficient Retirement Portfolio Strategies Tax-Efficient DrawDownTM Strategies loss harvesting asset sales/specific identification method interest annuities insurance & gas investments real estate investments Unrealized Appreciation (NUA)

2 DrawDownTM IRA conversions Single Married Filing Jointly Married Filing Separately Head of Household 10% $8,700 $17,400 $8,700 $12,400 15% $35,350 $70,700 $35,350 $47,350 25% $85,650 $142,700 $71,350 $122,300 28% $178,650 $217,450 $108,725 $198,050 33% $388,350 $388,350 $194,175 $388,350 35% > $388,350 > $388,350 > $194,175 > $388,350 investment accounts income generated within the account ( interest, dividends, capital gains, etc.) is taxed each year to the account owner investment accounts ( traditional IRAs, traditional qualified retirement plans, non-qualified annuities) income generated within the account is not taxed until distributions are taken from the account investment accounts ( Roth IRAs, life insurance) income generated within the account is never taxed when distributions are made (provided certain qualifications are met)

3 Tax-deferred Taxable Tax-free Future income taxed at same or lower tax rate Future income taxed at higher tax rate 1) Taxable account 2) Tax-deferred account 3) Tax-free account 1) Tax-deferred account 2) Taxable account 3) Tax-free account Tax Structure Overview Tax-Efficient DrawDownTM Decision Matrix Basis Recovery of Retirement Investment Accounts Key DrawDownTM Concepts structure Determining the optimum mix of taxable investments, tax-deferred investments and tax-free investments ( where should retirement savings be invested?

4 Asset allocation Asset allocation done on an after-tax basis location How investors distribute assets across taxable accounts, tax-deferred accounts and tax-exempt accounts to create tax advantages bracket management Short-term timing of income and expenses on a year-by-year basis so as to minimize overall income taxes over the long-term AlphaTM The improvement in portfolio returns produced by efficient income tax management Key factors impacting the tax structure Age Other sources of income ( pension, Social Security, deferred compensation)

5 Retirement cash flow needs Future tax rates This document may contain copyrighted material the use of which has not always been specifically authorized by the copyright owner. Keebler & Associates, LLP is making such material available in an effort to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a fair use of the copyrighted material as provided for in section 107 of the US Copyright Law.

6 In accordance with Title 17 Section 107, the material in this document is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use this copyrighted material for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner. Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.

7 No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment plan or arrangement to any other party. For discussion purposes only. This work is intended to provide general information about the tax and other laws applicable to retirement benefits. The author, his firm or anyone forwarding or reproducing this work shall have neither liability nor responsibility to any person or entity with respect to any loss or damage caused, or alleged to be caused, directly or indirectly by the information contained in this work.

8 This work does not represent tax, accounting, or legal advice. The individual taxpayer is advised to and should rely on their own advisors. TM Tax-Efficient DrawDown Strategies and Tax Alpha are trademarks of Keebler & Associates, LLP TO ORDER THIS CHART AND/OR FOR MORE EDUCATIONAL INFORMATION AND/OR TO BE ADDED TO OUR NEWSLETTER: E-mail Bonnie Lamirande at This document may contain copyrighted material the use of which has not always been specifically authorized by the copyright owner.

9 Keebler & Associates, LLP is making such material available in an effort to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a fair use of the copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 Section 107, the material in this document is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

10 If you wish to use this copyrighted material for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner. Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.