Retire Smart Austin | Episode 201

Cynthia de Fazio  00:27

Welcome to Retire Smart Austin. My name is Cynthia de Fazio, joined today by Phil Capriotti Senior of Empower Wealth and Tax to our viewers at home, we have a very special show for you today. We’re going to talk a little bit about the importance of tax planning overall. This is our 201st episode. 201st right? That’s how you say it. And we are so excited that you’re joining us today about this very important topic. Phil, how are you today?

Philip Capriotti  00:53

Wonderful Cynthia, you know, so happy. I’m so happy to be here with you. First of all, I was reading this article, okay, on the 2025 certified CFP of standards, and I’m reading it, and I’m thinking, we’ve been talking about this for 15 years now, yeah, so we’re going to kind of dig into it today and I’m glad we are. We probably may even stretch it to an additional show next week, but, but at any rate, I’m happy to be here, and my golf swing is starting to get a little better, okay, but I’m very inconsistent. It doesn’t have the consistency of the show.

Cynthia de Fazio  01:36

That happens. I think a lot of it is mindset with the golf swing. I have to be honest, if you’re thinking about something else, at least for me, as a golfer, like, I can totally tell the difference.

Philip Capriotti  01:46

So, here’s what I decided to do. You know, I’ve been struggling. You know, we, we hate to admit fault, but I have no problem with it, because I know, as human, you naturally have faults, of course. But what I decided to do is reach out to Bobby, and I’m going to actually start golf lessons. That’s fantastic. My thought is knowledge, just like our clients, need knowledge in order, you know, to retire tax efficiently and do all of the things that give you a successful retirement. My objective is, in order to have a successful golf game, I’m going to need planning lessons and professional tutelage. So-

Cynthia de Fazio  02:22

I love that. So, you’ve never taken lessons before?

Philip Capriotti  02:24

Never.

Cynthia de Fazio  02:25

You are amazing because you’re an avid golfer. You’re a great golfer. So, you’re just self-taught.

Philip Capriotti  02:30

I’m not- but I’m not that good. I get a 20 handicap, and it’s not getting any better. So, I said, You know what? Okay, stop the stubborn. Okay, reach out to the professionals, and let’s see what we can learn. So, I’ll keep you posted on that. I’m going to start, formally start my lessons next week and it’s great too, because it’s right down the street from our Horseshoe Bay office. So, after I finished work, I’m going to go see Bobby around 5:00, 5:30 and see if we can iron out this swing that sometimes feels like an old rusty gate.

Cynthia de Fazio  03:04

Iron out. I love that golf blank out, fabulous. Well. Phil, speaking of seeking out the professionals, let’s talk a little bit about this survey, 2025 CFP, professionals, taxes, survey report. This is something that you have been driving home, see another golf analogy driving home for so very long, and tell me a little bit about your thoughts when you started going through this. What surprised you so much?

Philip Capriotti  03:31

What shocked me is the fact that they’re just getting around to doing the survey in 2025 this survey should have been done back in around 2010 as soon as Congress lifted the lifted the restriction where, prior to 2010 we weren’t allowed to do Roth conversions. After 2010 they lifted the limit we can do Roth conversions. It didn’t matter what, what age, it didn’t matter whether you were working, okay? And it didn’t matter how much you can convert small or large. So, they lifted those three restrictions, okay, right then and there. I And with all due respect for CFP, I’m a big, big fan. I truly am. But this should have been done a long time ago, absolutely. And the reason I say that is there are a lot of folks who have retired. They’re working with advisors that aren’t tax professionals, and many of them don’t realize just what they’re losing out. You see every extra dollar you give the IRS at the end of the year needlessly, okay, is $1 that you no longer have to spend. That’s true. So, when we look at paying excess taxes in retirement, and also inflation, how inflation, which is a hidden tax we’ve talked about that to not work with an advisor that doesn’t structure your tax planning efficiently, really, it really reduces the effectiveness of your retirement. An income plan. The other thing that Congress did was they stopped the ability to be able to deduct your advisory fees. So, a lot of folks started, you know, before you were able to deduct advisory fees, you could take it off your income tax. Well, they eliminated that. So, what they did was they said, hey, you know, you can’t deduct that. We want you to get professional advice, but you can’t take it as a deduction. That was also a big mistake as well. So, it looks like they’re bringing both back. Okay, okay, and that’s going to be part of this new Tax Cuts and Jobs Act, which, good Lord willing, and a creek don’t rise, will be getting passed shortly, okay, because our this current agenda will not go anywhere until they pass this tax bill. Okay. Until we have a certainty, so, which was what this- a survey was one of the key points the survey pointed out is we have to have certainty on taxes if they make this Tax Cuts and Jobs Act permanent, now we can plan our retirement taxes, we can plan our Roth conversions. We can do a lot of planning because we know it’s not going to change with the next administration.

Cynthia de Fazio  06:09

Okay, okay, yep. So important. One of the things mentioned it says nearly 9 in 10 CFP professionals say their clients’ financial objectives are at risk due to the pending TCGA expiration. Wow, that’s a wakeup call. Right. 9 out of 10.

Philip Capriotti  06:24

Certainly is. And also, out of 95% of these folks, after talking with clients, and I believe they surveyed, it was a pretty broad population, couple thousand, if I recall correctly, said the one, number one most important issue to clients, it used to be running out of money. Number one issue now is paying too much in taxes in retirement.

Cynthia de Fazio  06:50

Wow. So that is a concern that people are across the board.

Philip Capriotti  06:53

Yeah, it was almost three out of four. Their primary concern was being overtaxed through retirement after paying taxes through their entire life, their working years. Wow. So, to for us, you know, being a being a tax guy, a tax you know, office, we’ve always focused on taxes, not just the taxes today, but future taxes, because we look at distribution planning, you know. So, while you’re working, you’re accumulating but when you retire, you’re depending on this money for income, along with your Social Security and other forms of income. But it is dissected by the amount you give the government and the amount inflation gives you the reduction of purchasing power. So, I was glad to see that they focused on these concerns. So, there were a couple different things that they looked at. So, the CFP professionals, okay, clients place the greatest important importance on taxes and tax implication when describing their financial goals. So, my thought to you out there, folks, if you’re and again, with all due respect to other advisors, you better wake up and smell the coffee here. If you’re working with clients, especially higher net worth clients in retirement, and you’re not focusing on tax planning and you’re telling them to go see their CPA or another tax official. You got to get with the program if it needs retooling your education, if it needs talking to your company. This is a number one priority with retirees. Is tax planning? Yes. So, what does that mean? Tax Planning? Well, the number one variable in efficient tax planning is a Roth conversion strategy.

Cynthia de Fazio  08:41

Absolutely. And you’ve been talking about that for years.

Philip Capriotti  08:44

We’ve been talking about this for years, 15 years. Let’s see. I’ve been an Ed Slot Master Lead IRA advisor. This is my 18th year. We started talking about it 15 years ago, wow. And so, it’s taken 15 years for it to become in the forefront, right?

Cynthia de Fazio  09:01

You’re the trailblazer. That’s where you started.

Philip Capriotti  09:03

I guess it is so. So another, another point that I would another variable, I would point out to you is, if you’re working with an advisor now, all of a sudden, they start doing tax planning, you’re going to want to- I recommend you work with advisor who’s who has literally hundreds and hundreds of retirement plans where they focused on tax planning, absolutely. In other words, you need the experience absolutely so. With that being said, if you’re not working with an advisor, if you’re working with an advisor who’s managing your portfolio and not managing your taxes in retirement, it’s time to not just get a second opinion, quite frankly, get another advisor.

Cynthia de Fazio  09:46

Phil, perfect opportunity for us take our first commercial break today. What do you want to offer the viewers at home?

Philip Capriotti  09:52

So, folks, what I’d like you to do is call 888-818-6557, you know, we’re on two different stations. Now and then we have the four radio shows, so we’re getting a lot of traction. It’s really, kind of, it’s a lot of fun. Absolutely, I can’t hire advisors fast enough, but that’s quality advisors fast enough. But at any rate, or click the QR code go to empowertaxbill.com and when you fill out the form, let them know that you’re you know you are working or not working with an advisor, but you want to get, you want to have a tax efficient retirement income plan, complimentary, customized to you. Everyone’s situation is different. Also, let us run a morning star report and portfolio observation on your portfolio. We want to see how tax-efficient the portfolio is. So, here’s one of the things that we started doing. We started doing tax loss harvesting for folks that have larger taxable accounts. Folks a taxable account. You have your tax deferred accounts. They’re pretax accounts, you know, like your 401(k), IRA, you have not paid taxes on it, then you have taxable accounts, their accounts, it might be an investment portfolio. You have to pay taxes on the dividends and interest. It earns each year, okay, okay, not the growth. So, with that going on, what we’re seeing is a lot of folks, they have these, literally millions of dollars in some of these for 2, 3, 4, and there’s no significant change. Their advisors are doing tax loss harvesting, like once a year, rebalancing like four times a year.

Cynthia de Fazio  11:33

All right, let’s give them an opportunity to call in. What do you think, we need to open up the phones? Because I know people are leaning in, saying, When can I call?

Philip Capriotti  11:41

We’ll continue that second segment.

Cynthia de Fazio  11:44

Okay, perfect. The number to call is 888-818-6557, again, it’s 888-818-6557, we know that you’re in the viewing audience state, and you’re probably asking yourself, do I have a proper tax plan for my retirement years? Do I have a strategy? Has my advisor even brought this up to me? If the answer is no, call in today, 888-818-6557, today’s show is talking all about the importance of proper tax planning and some changes that you can make today to have the retirement of your dreams. Don’t forget, 888-818-6557, or you can click the QR code at the bottom corner of your screen, claim your time accordingly. We’ll be right back momentarily with Phil Capriotti Senior. Stay tuned.

Philip Capriotti  12:27

Hello. My name is Phil Capriotti. You know we have been helping folks like you create a tax-free retirement income plan for over two decades. I am a firm believer that if you’ve worked and paid taxes for the last 50 years, the one thing you shouldn’t be burdened with is excessive taxation and retirement at Empower Wealth and Tax we specialize in helping you reach your desired retirement lifestyle with a tax free and tax efficient retirement income plan with the probability of taxes going up significantly in the future. Let’s plan your retirement right call us today or select one of the options below and start empowering your retirement right now.

Cynthia de Fazio  13:17

Welcome back to Retire Smart Austin. My name is Cynthia DeFazio, joined today by Phil Capriotti Senior of Empower Wealth and Tax and we’re talking all about the importance of proper tax planning in your retirement years. Phil, before we went to the commercial break, you were talking about tax loss harvesting. Can we continue on that same vein? What exactly is that? And why should the viewers be aware of tax loss harvesting.

Philip Capriotti  13:42

I’ll say this, Cynthia, if this is a topic that our viewers are not familiar with, they’re probably working with the wrong advisor so many times these and this is where, when we’re working with these big box retailers, they really don’t want to talk about taxes there. They always defer to the CPA. You know, like every single retiree has a CPA, what tax loss harvesting does? It allows you to- it allows you to efficiently change your portfolio monthly. So, tax loss harvesting, we just saw a major correction in the market, and we’re going to see this throughout retirement. I figure our retirement has about a 30-year timeline from the time we retire, anywhere between 20 to 30 years. So, over the course of those two or three decades, we’re going to see corrections. Sure. We’re going to see the market go up. We’re going to see it go down, of course. So, first thing we want to have make sure that our income is guaranteed. But what we want to do is many of these folks are paying taxes on dividends and interest and not actually taking it out of the account and spending it. They’re allowing these accounts to just continue to grow, and the reason is they don’t need the money. I understand that, however, with these taxable accounts. What we want to do at least once a month is we want to sell losses. Offset it by selling gains, okay, so that I have a 0% long term and/or short-term capital gain. Use that new money to invest in new technologies and make my portfolio more diversified. Okay, to me, this is common sense. Now we used to do it manually. Now we have software that helps us. You know, with that, AI and I won’t get off on that trend, but the fact of the matter is, we’re now doing it for most of our clients are like, Phil, can you do it twice a month? Absolutely, we can do it twice a month. So, the software that we have allows to rebalance and reallocate, selling losses, offset it with gains, getting new money and going into new technology. So, I’ll give an example, some new technologies, like mini-nuclear, for instance, many of these old portfolios, they don’t have mini-nuclear in it, or even, or mini-hydrogen. Well, these are new forms of energy, okay? And they’re going to be powering us into the future. So, if your portfolio is not, it’s your taxable portfolio, okay? If you’re just setting and forgetting it, right, and doing tax loss harvesting once a year or even quarterly, you’re missing the boat. So, this is part of active management, of course, tax efficient acts of management with a taxable account. Okay?

Cynthia de Fazio  16:28

It makes perfect sense, because you want to stay with the pulse of what’s happening in the world, you have to make some changes. What if you were staying into a portfolio where some of the selections are outdated, if you will? Look how far we’ve come in the past 20 years.

Philip Capriotti  16:42

And many times, these portfolios, the dividends are used to buy additional stocks in specific companies. So, we get over-leveraged in one particular company, because we rebuy in stocks for 20 or 30 years in these things, right? So, the rebalancing is extremely important, but tax efficiently. So, many advisors I’ve had- I had one advisor say, Oh, no, don’t move your money over to Mr. Capriotti. You don’t want him to sell off your taxable account. It’ll create a huge tax problem. You know the difference between cost basis and what it’s worth now, and I’ve had clients say that to me. I’m like, well, your advisor must not be- and with all due respect, we use software now that does tax loss harvesting. Literally. I could do it daily if we want, but we relegate it to once or twice a month so that we can maintain balance. So, the fact is, even some of these advisors, as though rebuilding this portfolio is going to cause a tax issue. When it’s zero tax- it’s a zero-tax net loss. Wow, okay, and it literally can, depending on the size of the portfolio, it allows us to free up tens of thousands, in many cases, hundreds of thousands of dollars in new money, just by selling losses, offset gains, and then reinvesting in alternative companies and new technologies to winner.

Cynthia de Fazio  18:03

It makes perfect sense to me, absolutely.

Philip Capriotti  18:05

Yeah. So, so it’s so one of the things that, when I was reading this article, I’m reading this article, and I’m like, this is our tax aware software that we’re using in our portfolios. That’s what they’re talking about. Wow, they’re not talking about doing it once a month, twice a month. There they are talking about the importance of it. So, this is a start. This is a start. Absolutely I believe in working with a certified financial planner, but who is also a fiduciary. So just working with a CFP professional isn’t enough. And in my professional opinion, working with a CFP professional who works for a big box retailer and is forced to sell only that company’s products still limits you absolutely very being a certified and working with a team of CFPs, because when we run our Morningstar reports for our clients, they’re done by a team of certified financial planners who are also fiduciaries. So I want an objective view, and I really want to be able to because every single dollar I save in either taxes or making my portfolio bigger and better tax efficiently is a way to ensure that not only kind of will I be able to weather the storm with my financial plan, I’ll be able to use that money to legacy plan for my kids and grandkids as well.

Cynthia de Fazio  19:32

Because Phil, at the end of the day, you’re keeping more of your hard-earned money. You’re paying Uncle Sam only what’s needed, and the rest is yours to use as you enjoy and you’re boiling it down to being simplistic.

Philip Capriotti  19:43

So, yeah- so, between- and if they eliminate step up in basis, if a future administration eliminates step up in basis with these taxable accounts, you have a serious issue. Now, if you’ve been tax-loss harvesting all along the way, that’s just a much- a much- it’s a much grander show. As far as I’m concerned. Yeah, so-

Cynthia de Fazio  20:05

Well, Phil, time for our next commercial break, but you have a very special offer to the viewers at home, spend some time talking about what that is.

Philip Capriotti  20:11

Well, what I’d like you to do is pick up the phone. We have a fast track now. We’re actually using a lot of technology. One of the complaints we’ve had from our viewers is it takes too long to see you, Phil or one of your advisors, it’s taking us two weeks. So, what we’ve done now is, when you click the QR code and you go to empowertaxbill.com you can, we can fast track you. So, if you start putting some of your information in basic information, we don’t need a lot, we’ll be able to get you into the office within a week, or sometimes within two or three days of making the appointment. The idea is to have the counseling come in, have a start on your planning as quickly as you want or as slow as you want. So, for some folks that want to take their time and stretch it out over three weeks, three months or what have you. That’s fine too, but if you want us to fast track you click the QR code go to empowertaxbill.com, we’ll talk about all of the subjects that we’re talking about today will be available to you. We’ll be able to get you in very quickly to see a tax- to see one of our tax professionals and certified financial planner.

Cynthia de Fazio  21:20

Phil, thank you so much to our viewers at home. The number to call is on your screen, 888-818-6557, 888-818-6557, or to be even quicker, grab your smartphone, open up the camera app and click on the QR code at the bottom corner of your screen. When you get to the landing page, empowertaxbill.com you can put your information in and Phil, or one of the team members, will reach out to you as quickly as possible to get you on the schedule. It’s so important to do your tax planning today, because the tax rates of the future, they’re unknown, so why not plan when you know what they are? Today? Again, 888-818-6557, we’ll be right back momentarily on Retire Smart Austin.

Philip Capriotti  22:04

Hello. My name is Phil Capriotti. You know, some of the folks that come into our office are concerned that they might outlive their money in retirement. At Empower Wealth and Tax we’re able to address those concerns by answering your questions and by developing a comprehensive tax efficient retirement income plan now this includes a cash flow analysis, a tax and risk assessment, as well as a comprehensive investment portfolio review. Remember, this is a complete and comprehensive analysis, and is prepared by one of our licensed fiduciaries, absolutely free. As you know, we never accept compensation for this service. We simply want you to be educated and informed. So, call us today, or select one of the options below and start empowering your retirement right now.

Cynthia de Fazio  23:03

Welcome back to Retire Smart Austin. My name is Cynthia DeFazio, joined by Phil caprioti Senior of Empower Wealth and Tax and we’re talking today about the importance of tax planning. We’ve been talking about this for a while now, but obviously the survey is actually bringing it to a whole new level. Phil, I love today’s show because obviously the one thing that I know that you’re so passionate about, we’ve been talking about it for what, five years on the show, you love talking about Roth conversions. And in this study that came out, it says 64% of CFP professionals are most likely to recommend Roth conversions. You’ve been recommending them for years.

Philip Capriotti  23:40

For years. And here’s the thing, when we recommend a Roth conversion, we don’t want the client to have to do it themselves. So, when you’re working with a CFP professional, especially one that’s a tax professional to go along with it, it’s not enough just to manage your portfolio. You have to manage the taxes well. You want your financial advisor not just to manage your portfolio, but manage your Roth conversions in a tax efficient manner. Show me the way. Don’t tell me to do it. Show me how to do it. Now it takes time. Time is money, but the fact of the matter is, if we want to reach a 0% tax bracket in retirement. For most folks that have spent the majority of their time saving in retirement accounts, it’s going to take sometimes between five and seven to eight years to implement a Roth conversion strategy each year to get you to a 0% net 0% tax bracket in retirement. Wow. Okay, I have a good 120-150 people, of our clients that are totally tax free, and their retirement income goals are well over 100,000 a year. They’re getting their Social Security tax free because they’re taking Roth distributions. But we did the heavy lifting of recommending Roth conversions and walking clients through it. I would say, folks, if your financial advisor is not executing a Roth conversion strategy to reduce your RMDs and to coordinate your retirement income plan, dial, pick up the phone right now. Dial, 888-818-6557, come on into the to the office, and let us show you what it’s like to work with a certified financial planner, a licensed fiduciary, who also will help you structure your Roth conversion strategies. It’s not a one and done every single year, folks, if you file your tax return and haven’t done a Roth conversion by looking at your tax return and seeing how much you can convert at that lowest tax bracket, you’ve wasted a year.

Cynthia de Fazio  25:48

Absolutely, absolutely. One of the things that also comes to mind, this is interesting. We only have a couple minutes left, but it says that 64% of CFPs say increasing contributions to retirement plans, which sounds great, right? But Phil, I want to ask you, aren’t they just like a tax time bomb, If the right strategy is not implemented?

Philip Capriotti  26:08

It certainly is, so the- so we want to look at two different strategies to bring you to tax efficiency in retirement, not just the Roth conversions. If you’re charitably inclined, like we are, okay, once you reach RMD age, once you have to take your first required minimum distribution, we can pay that RMD directly to the 501(c)(3), charity. Many of our clients have, you know, one or two or three charities. I have clients that have 20 different charities. I love that. So, the fact of the matter is, if you pay it directly to the charity, as opposed to having the RMD come to you and you paying the charity. That’s not tax efficient. So, when we look at these strategies again, if you have a significant IRA, 401, K or significant wealth, and your current financial advisor is not a tax advisor, they’re telling you to look somewhere else for that. Come on into the office. Let us show you the way to tax efficiency in retirement.

Cynthia de Fazio  27:06

And why not get a second opinion if someone thinks that they’re in the proper hands, doesn’t it always make sense to make sure?

Philip Capriotti  27:13

If you’re not getting a second opinion, it would be like, God forbid, being diagnosed of some illness and not wanting to go out and get a second opinion. If you get a second opinion on your opinion on your health, when you want to get a second opinion on your retirement, 100% come in for a second opinion.

Cynthia de Fazio  27:28

Thank you, Phil. To our viewers at home, there’s a number for you to call on your screen, 888-818-6557, again, for a faster response time, grab your smartphone, click on the QR code at the bottom corner of your screen. That’ll take you right to empowertaxbill.com and you can put your information in and you’ll be called sooner. Be safe, be happy and be blessed. We look forward to seeing you back next week On Retire Smart Austin with Phil Capriotti Senior.