“Big Al” Clopine, CPA sits down with Senior Financial Planner/CFP® David Cook to discuss tax-efficient strategies investors should consider when building their portfolios. What is the best method for tapping into your accounts? Is “defer everything” still a relevant rule of thumb when it comes to your taxes? Find out in this week’s episode short.
0:14 “For our viewers that have money in a tax-deferred account, maybe a taxable account or some in a tax-free, and they retire, which accounts should they tap first?”
0:31 “The industry, for a long time, has been saying ‘defer everything'”
1:38 “You’ve got to be careful because a lot of times we see people drain all of their taxable accounts first or their cash first, and continue to defer their retirement accounts until age 70”
2:00 “There’s a high likelihood for most people that they’re not necessarily going to be in a lower bracket”
2:05 “You want to make sure that you have some diversification in how you invest and where you pull money out because that’s going to give you the control over what your tax situation is throughout retirement; it’s going to save you a lot more money in the long run”
2:20 “Let’s say you’ve got money in all three pools; what is the best way to start tapping these accounts?”
3:19 “Imagine if the only dollars you have left in retirement are everything that’s going to come out taxable”
3:48 “What’s interesting with a lot of people is that they’re in these low brackets for several years then a higher bracket because their required distribution kicks in so they have to take money out of their IRA”
4:33 “A lot of times retirees find themselves not itemizing anymore, so they might find themselves doing a standard deduction”
4:44 “Look and see where you’re at in terms of what assets that you have; if you’re heavily in to the tax-deferred, start looking at ways to bleed that out–best way to do that might be a Roth conversion. Get more balance, and then once you have balance then you can devise it as a strategy to tap different accounts over your lifetime to stay out of higher brackets”
