Freedom Financial Group, Free Yourself. Dream Big. Live Well.

Free yourself. Dream Big. Live Well.

Developing a Tax Minimization Strategy to Protect Your Retirement Income*

Tax planning is one piece of a comprehensive financial plan. Nearly every aspect of your financial life impacts your tax exposure. There are income taxes. Property taxes. Taxes on investment income. Taxes on retirement income. Taxes on gifts. Some people even face taxes on the assets they leave behind after they pass away.


The good news is you can implement strategies to minimize your exposure to taxes and protect your income and assets. At Freedom Financial Group we design and implement custom strategies based specifically on your needs and goals. Below are some strategies we may consider in developing your tax strategy:

Tax-Deferred Accounts

If you have a 401(k), 403(b), IRA, or other qualified retirement account, you’re probably familiar with the power of tax-deferral. In a tax-deferred account, you don’t pay taxes on gains as long as the funds stay in the account. By not paying taxes each year, you assets may compound at a faster rate than they would in a similar taxable account.


A 401(k) or similar qualified retirement plan is a great way to achieve tax-deferred growth, but it’s not the only option. There are other vehicles that could allow you to take advantage of tax-deferral, including:


  • Traditional IRAs
  • Roth IRAs
  • Simple IRAs
  • SEP IRAs
  • Annuities
  • Defined Benefit Pension Plans
  • Defined Contribution Plans
  • Solo 401ks


Tax-Free Income

There are also strategies that allow you to generate tax-free income in retirement. One is by using a Roth IRA. In a Roth IRA, you get no tax deductions for your upfront contributions. Your assets grow tax-deferred while inside the account. And then, after reaching age 59 ½ and assuming the account is at least five years old, you can take tax-free distributions from the account.


Not everyone is eligible to contribute to a Roth IRA based on income. However, you may be able to conduct a Roth conversion, essentially converting 401(k) or traditional IRA assets into a Roth. This isn’t right for everyone but can be effective in certain situations.


Other tax-free strategies may include municipal bonds, life insurance, and other vehicles.

Capital Gains Management

If you have investments in a taxable account, capital gains are likely a part of your tax picture. A capital gain is a realized-on gain on an investment that was held longer than one year. We use advanced planning to manage your income taxes and capital gains taxes to minimize your tax rate and your overall tax exposure. That could include managing the sale of assets or perhaps even harvesting losses to offset gains. The strategy depends on the client, but any investment strategy should include consideration of capital gains and investment income, and how they may impact performance.


Taxes are a substantial expense for most people, so tax management should play a role in any comprehensive financial strategy. Our team can help you analyze your tax exposure and make informed financial decisions that consider tax consequences.

How to Rock Your Old 401(k) & Avoid Surprise Tax Bills

How to Rock Your Old 401(k) & Avoid Surprise Tax Bills

As a taxpayer and saver, you’ve earned the right to see your savings grow in the most tax-efficient manner possible. Your biggest mistake? Doing nothing at all. Let’s write and rewrite until your retirement income is a perfect harmony, allowing you to rock on!

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