EPISODE #055

THIS IS HOW TO MAXIMIZE ON QUALIFIED DIVIDENDS

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The 19 Sources of Retirement Income: Qualified Dividends

In this episode, John continues his series the 19 Sources of Retirement Income. He takes a deeper look at last week’s episode. He also explains qualified dividends, and how they differ from ordinary dividends. A mix of both can bring you a resilient and tax-efficient income stream.

John is the author of 5 Ways Your Wealth is Under Attack and It’s Your Wealth – Keep It.” He has lectured extensively on financial planning and is a recipient of the Five StarSM Wealth Manager Award.

Don’t miss John’s takeaways:

  • Dividends come from owning stock in a company. Shareholders are paid from them in regular intervals.
  • Owning stocks as an individual—in addition to whatever you own in your investment accounts—provides another income stream. This can give you redundancy and protection in your retirement plan.
  • Your dividend yield should derive from both qualified dividends and ordinary dividends.

Plus:

  • All dividends are ordinary unless they are specifically designated “qualified”. In this case they have to meet certain standards set by the IRS. A company can pay out qualified dividends if:
    • It is a US company, publicly traded on a US market, or
    • It is a foreign company that either has been incorporated in the US or is part of a comprehensive income tax treaty, and
    • The investors hold their shares for a specified set period of time.
  • Qualified dividends are taxed at the capital gains rate. This is much lower than your tax bracket for ordinary income. It’s also the primary benefit of this type of dividend. You could pay 20% tax, 15% tax, or 0%, depending upon your income tax bracket
  • Do you have both qualified and ordinary dividends from many different types of companies in different industries and in different countries? If so, this gives you a resilient, tax-efficient income stream.

At Smallwood Wealth, we want you to accumulate as many of the 19 Sources of Retirement Income as you can. Investing in stocks as an individual gives you a separate stream of income from your retirement accounts. It also protects your plan from unforeseen events.

For more, listen above. If you are new to Smallwood Wealth schedule a Wealth Curve Conversation here.

You can connect with us on social media. Call us at (800) 797-1000 and set up a free, no-obligation phone call.

Let’s diversify your income streams for retirement.

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