Alan Clopine

Alan Clopine is the Executive Chairman of Pure Financial Advisors, LLC (Pure). He has been an executive leader of the Company for over a decade, including CFO, CEO, and Chairman. Alan joined the firm in 2008, about one year after it was established. In his tenure at Pure, the firm has grown from approximately $50 [...]

Tax deferral means taking a deduction and moving it into an earlier year or deferring some income to a later year. If you do these tax deferral strategies year after year you can utilize the time value of money.

Dive Deeper into these Tax Deferral Strategies on Our Blog


Today we’re going to talk about tax deferral strategies. And so this is a way that you can actually defer your taxes until a later date. It’s not quite as good as a tax deduction, but it is still powerful in terms of saving taxes.

First thing I want to get into is retirement plans, and I think a lot of you know retirement plans: you put money into a retirement plan, you then, actually, don’t have to pay tax on those dollars until you pull the money out. It could be a 401(k), could be a SIMPLE IRA, could be a defined benefit plan, any number of things.

The second way is for you business owners, deferring income, accelerating expenses. This is a common one, you probably already heard it, but I’m still going to repeat it for you newbies. So when you get to year end, if you’re having a good year, you might want to kind of defer your billings, maybe some into next year. So you get receipts in the next year, because they’ll count for next year’s income, and you might want to prepay some of your January expenses actually in December to get a tax deduction that’s if you’re a cash basis business owner.

Low turnover Investments is another one, and if you have a mutual fund or an index fund, take a look at the turnover percentage, because that will tell you how often the investments inside the fund are bought and sold. What you’re looking for is one with a small percentage, like 10%, something like that. Which means they’re only buying and selling 10% of the stocks or bonds each and every year. So there’s not a lot of gain on sale. On the other hand, if you see a fund that has a 100% turnover, you’re going to be paying a lot of tax on that, even if you don’t need the money.

Number four is a cost segregation study for real estate owners. This is a way to take your depreciation and move it up into earlier years to get more deduction upfront. Remember, we’re talking tax deferral, so we’re actually not creating extra deductions, we’re just taking deductions earlier with all of these strategies, and then that way you don’t have to pay as much tax right now.

Number five is 1031 exchanges. Also real estate investors. This has to do with you have a property, you want to sell it, it’s a rental property. You want to buy another rental property, so you can do a 1031 exchange and not pay any taxes, currently on that.

And then finally, more complicated, is a charitable remainder trust. This is a great technique, also for real estate owners or somebody that has highly appreciated stock. You put the stock into the charitable trust, the charitable trust sells it. Since it’s tax-exempt, it pays no tax and you get a lifetime earning stream, as long as either you or your spouse is alive, of income and principal. It can be a great way to go, even if you’re not that charitable. But if you are charitable, this can be even better.


What Is a Tax Deferred Retirement Plan?