Cynthia de Fazio 00:00
Welcome to Retire Smart Austin. My name is Cynthia DeFazio, joined today by Phil Capriotti Senior of Empower Wealth and Tax and to our viewers in the Austin area and beyond, we have a big show for you today. We are talking about a tax survey that came about, and Phil kind of broke it open a little bit last week. We’re going to continue with it this week. Overall, the overview is the importance of proper tax planning, most specifically in your retirement years. Phil, how are you today?
Philip Capriotti 00:55
I’m wonderful Cynthia, and it’s good to be back with you in the studio. It’s so good. You look wonderful, by the way. I love that suit on you. That color is amazing.
Cynthia de Fazio 01:04
Thank you. Thank you very much. And you look very dapper, very handsome. I love the blue on you.
Philip Capriotti 01:09
Yep, we got a little summer blue going on. Yes. Anyways,
Cynthia de Fazio 01:13
The shades of green for summer as well.
Philip Capriotti 01:17
It’s wonderful. So, today we’re going to be talking about the shade of green and our clients’ retirement portfolio, keeping more of it. That’s good. Yes. So, this CFP Board survey was simply amazing, and I understand, what if this came about? This is going to be at the end of the year, December 31 the tax cuts and Jobs Act expires, and we’ve been talking about this is like a number one agenda for the Trump administration to make this permanent and add a few extras to it, like no tax on tips. I’m a big fan. That’s great. Folks that wait on you shouldn’t have to pay taxes on their tips. I think it’s obnoxious to do that. Have to claim the others. No tax on Social Security. Let’s face it, initially, when Social Security started, it was designed to be tax free, a tax free, help. That’s true, okay? And Tip O’Neill and Reagan came up with that provisional income formula back in the back in the mid-80s, which made up to 50% of it taxable. And then, of course, President Clinton, he figured he didn’t want to be outdone by Reagan, so he made that 85% of it going back to tax free. Social Security, I believe, is extremely important, and it should be added to the plan. But talking about taxes, I like the shift of the CFP Board basically. I believe what they’re doing is enlightening their sort of Certified Financial Planner professionals across the country. Hey, get with it. Tax Planning is extremely important to your clients, absolutely. Because my thought is, if you’re not working with someone with a and again, certified financial planning professional, great, but if they’re not your tax advisor and they’re not talking to you about tax reduction strategies, there are a lot of us out there. Okay, you do not have to be content with someone who’s not going to give you tax advice each and every year in retirement, because the tax laws change every single year. I want you all to think about that, but they talked about a few ways of reducing taxes. So, number one is increasing contributions to retirement accounts. Okay? They talk about tax loss harvesting, yes, all of a sudden, they’ve come up with this. Now I’m going to one up it. I believe you should tax loss harvest at least once a month, minimum, 12 times a year. And we’ll talk about the benefits of that, using some of that new money. And for those of you who missed it, tax loss harvesting, we want to sell losses against gains to get money from our taxable accounts, new money to invest in new technologies so our portfolio doesn’t stay stagnant and obsolete. We talked about charitable giving strategies. Okay, if you give to your shirt, I mean, if you give to your church, there are ways to go about doing that. We can actually gift stocks directly to the church. We’re actually going to do a segment on that. We’re going to do an entire show on that in about four or five weeks, where we actually give stocks to the church to eliminate capital gains, as opposed to using dividends. And so because that church or charity can accept those stocks, they can receive dividends and interest from those stocks, and they don’t have to pay taxes on it amazing, because they’re 501, c3, we also talked about the use of non-retirement accounts for tax advantage accounts. But we’re going to jump right into Page seven. Okay, perfect. And page seven, I thought, was really kind of wonderful. Um. And CFP professionals recommend a variety of taxes to help their clients achieve tax efficiency in investment strategies. Yes, okay. Number one, timing of tax gain realization, yep. Number two, Roth conversions, yes. So, I take a look at Roth conversions, and I’m thinking, I don’t know why that’s number not number one, but they do go again and Dan, I could see the one or two. Yeah. So, they’re saying more of your Certified Financial Planner professionals are helping clients achieve tax efficiency. So, I’m going to stop right there. Okay, okay, because a lot of certified financial planners I know refuse to talk about tax. Oh, absolutely okay, and they may work for companies, big box retailers that don’t allow them to talk about taxes. So now we have an imbalance here. Yes. So, the point that I’m making is, if you’re watching the show and your financial advisor is not also your tax advisor and isn’t talking to you on your reviews about these tax tips, this- they could be costing you a lot more money than just the fees that you’re paying them. They could be costing you a fortune in current and future taxation. So, with that being said, we could also use these tax efficient funds. There are many funds that you can get into where they’re tax efficient. Okay, all right, so we want to look at that. We also want to look at these asset allocation strategies. And I know that sounds like a lot of mumbo jumbo, but when you come in and we run a morning star report on your portfolio, we can tell right away if you’re using these techniques or not, and if you aren’t, how to implement them into your portfolio management system. So, I was really happy to see this 2025 CFP Board really stretch out on the taxes. I was just wondering why they didn’t do it sooner.
Cynthia de Fazio 07:00
What took them so long. I know, because we’ve been talking about this, as we know, for over five years together, and you’ve always been passionate, Phil, about incorporating tax planning into the overall retirement strategy for your clients. You’ve always seen the importance of it, obviously.
Philip Capriotti 07:18
So, what they’re recommending, yeah, so what they’re recommending, folks is, if you’re working with a CFP professional, great. What they’re saying- and they’re recommending their CFP professionals. And again, this is the board recommending- it- to- if you’re not a tax advisor: couple with a tax advisor, yes. Okay, so basically, I’m sorry,
Cynthia de Fazio 07:42
Makes perfect sense.
Philip Capriotti 07:43
Yeah, so couple with a tax advisor so you can get the best value for your money. Fact of the matter is, it comes right down to, are you content with your current advisor? Are you content with your current tax bracket? If you have already started taking required minimum distributions, are you content with how your taxes have gone up? Let’s say, God forbid, you lost a spouse, yes, so you’re following that when you’re now filing as a single file. Are you content with how your taxes just doubled. So, all of these are variables that must be talked about and discussed prior to the events occurring.
Cynthia de Fazio 08:27
Most definitely, and especially you mentioned if you’re already taking your RMDs. But what about those folks that are just getting to that age because, Phil, without having a proper strategy right now, a lot of our tax deferred accounts that we’ve been saving through our whole lives, our 401(k)s, don’t they become a ticking Tax Time Bomb if you don’t have the right strategy, that can be scary.
Philip Capriotti 08:50
If you’re ignoring this RMD, and that’s one other thing, if you do not have a required minimum distribution chart. In other words, your portfolio should look at what your average return is, what you’re spending, measure inflation, and based on your average return and what you’re spending in retirement, what are your RMDs going to be at every age. So, we call this an RMD distribution plan if your retirement plan, folks, does not have an RMD distribution plan in it. You need to make the phone call, you need to pick up the phone or click the QR code, because it’s you don’t know there’s a problem, unless you can see into the future. That’s true, and this helps us to see into the future also, what? And we’ll talk about this. I know we’re getting ready to break but when you do Roth conversions, I think I mentioned this many times before every single tax year, if you’re not doing a Roth conversion, in my professional opinion, with all due respect to the advisors out there, you’re not working with the right advisor. Now, if you have a retired. Plan that is not really extensive. Let’s say you didn’t have the benefit of saving 90% of your savings in IRAs. Let’s say you have a very modest retirement plan, maybe just a couple hundred thousand. You still need planning, but not really tax planning, okay. But if you have an IRA or taxable accounts of a half a million, a million, five million. I have clients coming in with 10 million, 11, 12 million, and so forth. They need to develop a tax plan. And I’ve had a lot of folks come in and say, Phil, the only reason we didn’t work with creative this or the guy down the street is because we love the tax planning. We can see the tax planning, and each year I even don’t mind writing that little check for the Roth conversions, because I know I’m playing in the 22 and 24% tax bracket. So, this is part of retirement income planning, tax efficient retirement income planning, and it’s part of working with a CFP professional who also is a professional tax advisor.
Cynthia de Fazio 11:04
And Phil, there’s a very special offer that you have to the viewers at home today. Talk about what that is before we take our first commercial break.
Philip Capriotti 11:10
Which one is it today?
Cynthia de Fazio 11:12
I think you’re going to go with tax planning. Let’s do the tax bill.
Philip Capriotti 11:16
Click the QR code and go on to empowertaxbill.com and hit the Fast Track button, okay, you’ll get a- it’ll open up a- it’ll open up a chart for you. We need some basic information, approximately how much you have in IRAs, 401(k)s, this type of thing. What’s your goal retirement income, you know? What’s your income right now? How close are you to retirement? And we get some basic information to get you right to a licensed fiduciary who’s certified and also certified to talk to you about tax planning and tax reduction planning in retirement.
Cynthia de Fazio 11:52
Perfect. Phil, thank you so much to our viewers at home. The number to call on your screen is 888-818-6557, that’s 888-818-6557. To schedule your complimentary consultation with Phil and his team to go over proper tax planning for your retirement. But even simpler and more in depth, actually, it kind of make is a play on words, but really it’s both go to empowertaxbill.com and when you get there, like Phil mentioned, you put in some basic, basic information, and it’ll show you an overview of what your tax implications are currently, today, and what they could be if you make some changes. That number again, is 888-818-6557, or click on the QR code at the bottom corner of your screen. We’re going to take a very short commercial break here on Retire Smart Austin, but we’re talking all about the importance of proper tax planning in your retirement years. Stay tuned.
Philip Capriotti 12:44
Hello. My name is Philip Capriotti. If you’ve already filed for Social Security and would like us to fast track you straight to a licensed fiduciary to create your tax efficient retirement income plan, we’ll be happy to accommodate you. You know, one of the most important priorities to ensure that you do not become tax poor in retirement is to number one, structure a tax efficient retirement income plan as well as a comprehensive Morningstar report. This will ensure that you understand three major variables. Number one, how much risk are you taking? Number two, how much return Are you receiving? And number three, how much are your internal and external fees? To fast track your meeting with one of our licensed and experienced team members, just click on the link below, complete the form attached so we can provide you with an accurate and detailed plan. Let’s start empowering your retirement right now.
Cynthia de Fazio 13:51
Welcome back to Retire Smart Austin. My name is Cynthia DeFazio, joined today by Phil Capriotti senior of Empower Wealth and Tax and our show today is all about the importance of proper tax planning in your retirement years. Phil, this is such an amazing study, and one of the pages they talk about actually at risk would be the TCGA expiration and personal financial planning goals. There are some pretty scary statistics in here. Let’s talk about what those are.
Philip Capriotti 14:18
So, this is what amazes me when I watch certain people in Congress talking about ending this and ending that, and only tax breaks for millionaires. It’s so misleading and full of untruths, I’ll be polite. Here’s what happened. December 22, 2017, during Trump’s first administration, they passed the tax cuts and Jobs Act. So, what does that mean to the average individual? So, the first thing they did was they decreased the marginal tax rates in every single bracket, okay? They made the 12% bracket 10. They made the 15% bracket 12. They made the 25% bracket 22, then they took that 28% bracket and they dissect that. It used to be 28% and 33%, so these are folks that are making 100 grand a year. They’re not millionaires and billionaires. Right. There are people raising families that are barely getting along, especially with all the inflation that was thrown on us a couple years ago. Right. So, what they did was they turned that 28% bracket and that 33% bracket into a 24% bracket. Wow. Okay, so that, what that did was that opened up the ability to do Roth conversions, much more Roth conversions at 24- 22 and 24%- Wow- instead of 25 and 33 and up percent, absolutely, that expires the end of the year unless they pass the tax bill. This is another reason the market is going up and down, up and down, up and down, because of the uncertainty once Congress passes this and potentially makes it permanent, this will now we know what taxes are going to look like in the future. The second thing that they did during this bill is they increased the standard deduction and they eliminated the personal exemption. Okay, okay, so now, if you if you’re married filing joint the standard deduction is $30,000 you don’t have to count all your receipts, okay? And it’s not individual. If you’re 65 and over, okay, you get an extra $1,650 exemption as well, add it to the 30,000, so, what they did is they if you’re over 65 and you’re earning just a little over $33,000 a year, you’re in a 0% tax bracket. Okay, so now that gives us a lot of wiggle room to do Roth conversions in the 10% bracket, 12% bracket, 24- 22 and 24. The other thing they did was they doubled the childcare credit, okay? And these are for working families. They also capped the deduction for that state and local income tax, or the SALT tax, okay? Now, a lot of folks that are on the coasts, in New York, California, what they did is, you have a deduction for your income tax, for your property taxes. Okay? What they did was they maxed it out. They said, Look, if you’re in a high tax state and you own a big, huge property and you’re paying $30,000 in property taxes, 40, 50,000 you can’t take a deduction off of your income tax. Now, you know the type of folks that live in homes like that. They are the millionaires and billionaires. It’s true. So, they eliminated that, and they capped it at- they capped the SALT tax at $10,000 so when I listened to these politicians talk, I’m like, What are you talking about? Do you even know what you’re talking about? Are you just reading what’s put in front of you? Anyway, they doubled the maximum estate tax exempt value now that also is getting ready to sunset the year after next. Okay, so we not only have to think about federal income taxes, we now have to talk about estate taxes, death tax. So, what they did that sunsets and that estate tax goes from- right now it’s $13,000,800, you have to have an estate over $13,000,800 in order to have to pay estate taxes. Okay, okay, they’re going to drop that down to between 3.5 million for single and 5 million for married. Wow. Okay, so and everything goes into that, your home, all of it, all of those assets, so this has to be dealt with. So, the estate tax exemption, the SALT tax, the pass through business tax, all of these deductions were designed to take less of our money so we’d have more to spend. And they were also designed to give us more to invest expanding our businesses, like in my business, for instance, we started with one office. We had five employees. Now we have three, getting ready to start our fourth office with 25 employees. So, it allows us to do that. And I know I’m kind of getting carried away. I apologize if taxes Great, yeah, if taxes are important to you, if you believe you’ve paid enough money in taxes well during your working years, and you want to retire tax free, or at least tax efficiently, please, you’ve been watching us for five years. Or if you just moved here, you’ve been watching us at least for the last month, year, two years and so forth. Pick up the phone. Dial 888-818-6557, or click the QR code if you’re too busy and maybe dialing the phone is inconvenient, it’ll automatically take you to our landing page. Click on empowertaxbill.com it’s. There to help you reduce your taxes. It’s there to help you fast track your way now, if you’re a higher net worth individual, you know, seven-digit, eight-digit individual, they’re going to feed you right directly to me. If you have more of a modest, you know, into $500,000 to maybe 1.5, they’ll fast track you directly into my son, who’s just as sharp, maybe even on some days, sharper, than I am, and then if you have a modest a modest retirement plan, we have other advisors that can handle this. But in either event, get your Morningstar, report your retirement income plan, and if you haven’t filed for Social Security, let’s find out what’s the best claiming strategy for you.
Cynthia de Fazio 20:40
Phil, thank you so much to the viewers at home. As you can clearly see by making this phone call today, it can change the trajectory of your retirement years if you need to have a solid plan for your taxes, today is the day to call in, 888-818-6557, or two. Fast Track. You can grab your smartphone click on that QR code at the bottom corner of your screen that’ll take you to empowertaxbill.com and you can put in a little information about yourself, kind of take a look at the picture of what it’s going to paint for you, of what your current tax implications could be. How can they be remedied? By making some changes. Find out today by clicking on that QR code empowertaxbill.com we’re going to take a very short commercial break. Don’t go anywhere. I have so much more with Phil Capriotti Sr when we return.
Philip Capriotti 21:28
Hello folks, it’s Phil Capriotti Sr, imagine reaching retirement with zero worries about taxes. That’s what over 250 of our clients have done by executing their annual individual Roth conversion strategy at Empower Wealth and Tax we’ve helped hundreds of people, just like you, turn their government taxable retirement accounts into their own personal tax free Roth IRAs, our clients are now thriving with the peace of mind knowing they’ve secured their financial freedom by eliminating their tax burden in retirement. Do you want to know how? Call now and let’s see if our proven Roth conversion strategies are right for you.
Cynthia de Fazio 22:18
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, especially in your retirement years. Phil, overall, I think if you interviewed, and I know you have throughout the years, just so many clients coming in, the number one thing that they’re thinking about is having their retirement income sustained throughout their retirement years, not go away. Would you agree that’s the number one concern?
Philip Capriotti 22:47
That’s number one. Number two is running out of money before you run out of life. And I would say a close second is going into the nurse being forced to go into the nursing home, or being not being able to take care of yourself, especially for those of us who are baby boomers. Of course, we are care caretakers of our children, and the last thing we want is our children taking care of us, so providing resources for long term care needs and or home health care needs. Now if you are on welfare, you have Medicaid and Medicare. You don’t have to really worry about that. If you become indigent, you become a ward of the state, and the state takes care of all those expenses. If you’ve saved for retirement and you have Long Term Care coverage, many times that long-term care will cover some of it, but not all of it. So, this is all part of that planning process. We want to make sure, number one, if you do not have Long Term Care coverage, which retirement account are you going to use to pay your nursing care at home? Because we’re not, they’re not going to cover us from welfare. They will, but they’re not going to cover us, those of us who save so this is also a concern. One of the concerns that this CFP Board brought out was a lot of these professionals, and I happen to agree with this, I really do you know, they eliminated the ability to deduct your expenses. You pay your investment advisor, and they so this was all part of that bill, and I would urge President Trump and his cabinet to consider those of us who are retired or about ready to retire. They need to be able to seek out a professional who not only manages their portfolio and their taxes, but the fee that they pay us, they need to be able to deduct that makes perfect sense. I mean, they should be able to deduct that. We used to be able to do that. And so, what this board, the board had determined is that since they eliminated that deduction, a lot of folks have turned into do it yourselfers. Yikes. Now that is scary. Scary, isn’t it? That is very scary to save a few bucks. And so for the most part, what we find, especially when we run a Morningstar report on your portfolios, we find the internal fees you’re paying on these obsolete mutual funds and some of these ETFs, some of them are as high as 1% a year, and you don’t see it because they don’t itemize it. When we run a morning star report many times, what we’ll see are internal fees that are 50% point. You know, 50 basis points, 60 basis points, someone’s up of 80, 91% a year. So, when we look at what I’m actually making in my portfolio, what is my risk? What are my fees? What we find is that if we eliminate all of these high internal fees with mutual funds, there is enough money there to pay for professional counseling, for your investments and for your tax planning. We see it a lot, but I really wish that they would get back on track. Not only get this bill passed, because I believe after they pass it, the market, our whole economy is really going to take off, especially with all the new investment that’s coming into our country. But they have to nail down this, the taxes. They have to make this Tax Cuts and Jobs Act permanent, and they really need to bring back the ability to deduct any fees you pay your financial professional or tax professional.
Cynthia de Fazio 26:27
100%, helps with legacy, inherited inheritance plans, charitable giving strategies, all of these things can be benefited by this. Wouldn’t you agree?
Philip Capriotti 26:36
I would agree. And the one other thing is they have to straighten out this estate tax, my personal feeling and get we do a lot of estate planning. They should eliminate it when you pay taxes on your assets and worked hard and you own a home or two homes, or whatever it is that should not go into a calculation of the government now taking money from you, 50 cents on the dollar, on everything you have over $5 million you should be able to pass it on to your kids and grandkids.
Cynthia de Fazio 27:05
Sure. Well, Phil, less than a minute left of the show this week, what final words of wisdom would you like to give our viewers at home, if you’ve
Philip Capriotti 27:13
been watching us and you’ve been enjoying our show, we’ve gotten a lot of compliments that our show is amazing in that it’s strictly educational. Of course, we want you to call and come into the office, and of course, we’d love to work with you, click the QR code go to empowertaxbill.com, book an appointment for a complimentary meeting. Let’s run a Morning Star report on your portfolio, and let’s see if your retirement income plan is tax-efficient.
Cynthia de Fazio 27:39
Phil, thank you so much to our viewers at home, that number to call is 888-818-6557, or you can grab your smartphone, click on that QR code at the bottom corner of your screen, empowertaxbill.com Be safe. Be happy, be blessed. We’ll see you back on Retire Smart Austin with Phil Capriotti one week from today.