Tax Planning

You can save a lot of money at tax time by making smart decisions throughout the year. For example,
contributing to a qualified retirement plan can provide you with significant tax deductions on your
income tax return.
Tax planning is also important during retirement. Some types of retirement income are taxed while
others are not. When planning distributions, a skilled financial advisor can ensure that you don’t land in
a higher tax bracket if it’s avoidable. For example, you may decide to withdraw money from a different
type of retirement account for some of your income or rely on Social Security to make up the difference.
Tax planning can make the biggest impact if you think about your income and expenses before the year is
over.

When you contribute to a tax-deferred retirement account, you can reduce your current tax burden and
build wealth faster. Since the money can grow tax-free, you can invest your full contribution each month.
If you’re participating in an employer-sponsored plan, you have even more funds for wealth building.
Depending on your financial situation, saving for retirement doesn’t have to be a burden on your
finances. With the money you save in taxes, you might find it easier to contribute. And that’s really what
those tax deductions are for; to encourage people to plan for retirement.

Below are answers to some of the most common questions about tax planning. If you have specific
questions about your financial situation and your taxes, please contact us directly.

When Should I Worry about Tax Planning?
It’s a good idea to talk to a financial expert about reducing your tax liability right now. Maybe you’re
already doing everything you can to minimize your tax burden, but maybe you’re missing out on
significant tax savings. You won’t know until you talk to us. If you’re paying income taxes every year, you
should probably think about tax planning.

Is Tax Planning Legal?
Yes. The IRS provides incentives in the form of deductions and credits. Taking advantage of these
deductions and credits is a legal and encouraged way to minimize your tax burden. The government
doesn’t want you to be poor in retirement. They’d rather you pay less taxes now and put money into
your tax-deferred retirement plan.

How Do Taxes Affect My Investment?
If your income is taxed before you invest any money, you will have fewer funds available for wealth
building, because you have to pay the IRS. If you take advantage of a tax-deferred account, you pay
yourself first. Any money you put into that retirement account, up to the contribution limit, is not taxed
and can grow tax-free until you’re ready to retire. That’s more money in your nest egg.