Tax Planning and Your Investments


Video Transcript

Hi folks. Ron Dickinson, Certified Financial Planner® and CPA. Today I’d like to talk to you about taxes…

I can see that I lost about half of you already. I mean taxes are boring, right? I agree except for a few of us tax nerds that really enjoy it. Tax strategies aren’t that exciting to most people. But I’m here to tell you that it’s critical! It’s critical to do a good job for the creation of your wealth and for the preservation of your nest egg. So I like to do your tax planning, your investment management, and your financial planning all in one place where I can dovetail the strategies with each other.

It’s more than just knowing what bracket you’re in. For example, if I’m doing your financial plan and we have a nice strategy built, I can run over, open up your tax return in our software, and test it to see if the results are real and vice versa. When I’m doing your tax return or when we’re in a discussion, maybe you have a question. We can see that’s a good tax strategy, but let’s run it over to your financial plan to see if it really works there as well.

We have software that costs tens of thousands of dollars. By combining that high end software together with our disciplines that serve our financial planners and CPAs, we think we can bring good results for you.

So here are a couple of quick live examples. Where should I buy an asset that we decide you should own but it produces income? Where should I buy that? I probably should buy that in your IRA rather than your regular brokerage account because the income is going to hit your tax return every year otherwise. By having it in your IRA, I can push off the income and the taxes as long as possible or we can choose when we take it out.

Where should I buy a growth asset that we decide you should own? If I buy that in your individual account, I get a cheaper capital gains rate. I may even get deferral offsets by depreciation, et cetera, or tax-free income. I want that on your individual account so that it flows through with your personal tax return. If I put that in your IRA, all those benefits are lost. Then when I would take out the income later, it’s all taxed at regular rates. That’s a significant penalty there. So we think we can save taxes for you by placing your assets in the right accounts.

Another quick example. When should you draw money out of your IRA? Most of us will say, “Well, let’s wait until age 70 and a half when I’m forced to take it out.” That’s true for some people. But for other people to take that money out, required distributions at age 70 and a half push them into a higher tax bracket yet. That’s not a pleasant thing when I could have brought it out earlier at age 65, 67, et cetera – at a cheaper rate. I’ve even had people that I pulled the money out at a zero percent bracket for a number of years before they’re forced to. That saves significant dollars! So it’s critical that we do this in a thoughtful manner.

We want to minimize your taxes and maximize your wealth. We want to go from planning to completion. We want it so that when I’m delivering your tax return or your financial plan, we can look each other in the eye and I can say, “You know, the things we planned on happening are exactly what happened.” No surprises. That’s nice.

So if you’d like to learn more, give me a call. I invite you. We could sit down in a non-complex, very informal meeting and explain our strategies to you, so you could understand them and see if they’re logical for you to implement. Give us a call. We’ll see if we could help. Thanks.

[Financial Planning and Investment Management Services offered through Dickinson Investment Advisors, Registered Investment Advisor.  Statistics and market information provided by Litman Gregory Advisor Intelligence.]

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