Retirement and Taxes – 3 Ideas You May Not Have Considered

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Strategy, my friends, is like a game of chess… you really have to take a look at the whole board and make very calculated moves to get to where you want to be.  Tax and financial strategies are just like that.  For each move you make, you still need to prepare for the next move made by the people and things you cannot control.  It’s fascinating, really!  At least to me.

Last week I was having one of my “catch up” meetings with Johny Makhijani  – my friend and client who also happens to be a CFP (Certified Financial Planner).  We meet often to chat about our mutual clients, to go over new tax laws or opportunities and to talk about ideas for promoting beneficial plans for clients.  This week, over breakfast at Bea Bea’s in Burbank (lovely place and if you’re in the neighborhood I highly recommend), I took the opportunity to ask him about some not so obvious retirement planning ideas that some of my clients might be able to use to either save taxes currently or earn tax free income for retirement.  Here are just a few take-aways I got from the conversation and from some follow up research I did afterwards:


  1.  Sole proprietors (filing Schedule C) can contribute to 401K programs for themselves and their spouses which could result in higher contributions and tax savings than a traditional IRA contribution?  Sometimes they can actually do both the 401K and IRA (traditional or ROTH).  AND….because of how these are deducted, it may not decrease their 20% deduction for pass-throughs in the new 2018 Tax Act.
  2. Depending on your retirement plan at work, you may be able to put after-tax contributions into it and eventually move those funds to a Roth IRA? Johny says he’s seen people able to put 20-30k per year in it, no matter your income!  Everyone is different so “results may vary” but there are some very real possibilities.
  3. The ROTH IRA is one of the most versatile vehicles for retirement savings?  You may not get a current year tax deduction, but Johny knows how to use it to implement a longer term, lifetime strategies for financial planning that incorporates future tax savings as well as growth.

Johny Makhijani and I have worked together on several clients to ensure the best possible tax savings that compliment the best possible retirement and long term financial planning strategies.  If you’re not using us (and you should be) be sure that you are involving a financial planner and your tax professional in your tax season discussions.  Its the perfect time to reflect on what you’ve already done financially and what adjustments need to be made to get to where you want to be in retirement.

Here’s the standard disclosure – tax and financial planning involve many moving parts.  You should always seek the advice of your tax and financial planning professional.  Need one?  Please feel free to comment or contact us.

We’ll chat again soon!


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