Cynthia de Fazio 00:00
You Cynthia, welcome to Retire Smart Austin. My name is Cynthia DeFazio, joined today by Phil Capriotti, Sr. and Phil Capriotti, Jr. of Empower Wealth and Tax and to our viewers at home. Have you often asked yourself, would there be compelling reasons for us to do a financial plan that’s also tax efficient in our own household? How would that benefit us in the future? Well, that’s what today’s show is all about. And so, thank you for joining us, Phil. How are you today?
Philip Capriotti 00:55
We’re wonderful. Cynthia. So good to see you again. And it’s really special pleasure to have my son, Philip, joining us today. We’ve been working together for over the last 10 years, and he certainly doesn’t get enough airtime. So, we’re going to change that as we go forward. So, thanks for the invite. I know you can handle both of us.
Cynthia de Fazio 01:17
Of course, because you’re both so amazing, and anything I ask you, you both answer just flawlessly. So, Philip, thank you for being here. And I should ask you, where can folks find you? What location are you in?
Philip Capriotti, Jr. 01:28
I’m running the Cedar Park office.
Cynthia de Fazio 01:33
Cedar Park. Okay, excellent, good, good, good. Well, today’s show is very interesting, compelling reasons to have a obviously financial plan for your retirement, but also one that’s tax efficient. I love this. We’ve come up with a few reasons, which I think would be wonderful to start with, so I’m just going to guide one to you, Phil, if you don’t mind, Phil, Sr., maximize after tax wealth. Why is that important to maximize your after tax, wealth in retirement?
Philip Capriotti 02:02
Well, it’s real simple answer, and this is one of the benefits of working with a true tax advisor that’s also your wealth manager. I ask a client very simple question, do you believe you’ve paid enough taxes so far through your working years. And if the client says, No, I tell them and they’ve worked for the- they’re getting ready to retire around 60, 65, I’ll ask them, when did you start working? And if they say, Well, I started right after college, I’ll mention to them, well maybe you’re probably in the wrong office, and I’ll see seriousness, my thought is, every dollar you save from taxation and retirement, again, is more money you get to spend for you and your family. You know, I listen to pundits and, you know, talking heads and so forth talk about fair share, fair share, fair share. Well, again, I believe if you’ve worked and paid taxes for the last 40, 50, years, you really need to set up a tax efficient retirement plan so you and if you’re married, you and your spouse, and after you’re gone, the surviving spouse doesn’t get pummeled with taxes, right? Lack of planning causes it 100% of the time, okay, especially with folks with significant assets, I might add, now if you’re broke and you’re poor, obviously you’re not going to be concerned with taxes in retirement, because chances are, you’ve already created your own tax efficient retirement. You don’t have the wealth to worry about, but if you’ve created a nest egg and wealth in retirement, you need to be ever increasingly focused on, well, on creating after tax wealth for you, your spouse and your beneficiaries.
Cynthia de Fazio 03:57
Sure, especially when you think about it right now, Philip, because Wouldn’t you say that taxes are on sale, so you should take advantage of some of these tax planning strategies for long term happiness.
Philip Capriotti, Jr. 04:07
Absolutely. Yeah, we definitely have decreased marginal tax brackets. It definitely could have been worse, for sure.
Cynthia de Fazio 04:15
Most definitely. So, we’re thankful, and I think now we’re looking at a sunset of what is it? 2028? 2029? Am I correct, Phil?
Philip Capriotti 04:23
Yeah, well, the Tax Cuts and Jobs Act of 2017 has been made permanent. And I will preface, folks, it’s permanent as long as a similar administration is in. these Tax Cuts in Jobs can be eliminated or changed or overruled by new administrations. Okay, so with that being said, it’s not sunset to expire unless a future congress and senate expires and by changing the law now most of the new tax. It’s like, for instance, there’s another $6,000 deduction for folks, 65 and over for each individual, if your income, excuse me, if you’re modified, adjusted gross income is under 150,000 a year. And then at sunsets, over 250 we’re going to do a whole show on this in a week or two. This allows us to do more Roth conversions. Now we didn’t have this in the current Tax Cuts and Jobs Act. So, this was a tradeoff, because they wanted to do no tax on tips, which we got through. They wanted to do no tax on overtime, which they got through, okay, up to $25,000 in earnings and tips. The other thing they want, it was no tax on Social Security. They couldn’t get it through. But what they did is they said, if you’re under 150,000 in income, modified adjusted gross income, you’ll get an additional $6,000 and you’re 65 and over, you’ll get an additional $6,000 for you, 6000 for your spouse, if they’re over. Now, that gives us another $12,000 in deductions. Wow. Perfect time to do Roth conversions now that sunsets in four years.
Cynthia de Fazio 06:15
Wow. Okay, very important to know.
Philip Capriotti 06:19
So, with that being said, if you’re not, if your advisor is not talking with you about it, wow. I mean, they need to, because that’s a lot of wiggle room to do Roth conversions into 10, 12, and 22, and 24% tax bracket. These brackets are not set to sunset, but they can be changed by a future administration. What type of situation are you seeing in your office? Philip, with regards to folks wanting to retire tax free?
Philip Capriotti, Jr. 06:49
Most people have not done the proper financial or tax planning to be able to fall into the tax free bucket in retirement. But for most folks, for a lot of folks, Roth conversions are very effective in reducing taxes over the course of one’s retirement. It’s not perfect for everyone, but because there are some situations where we want to look at the financial plan and determine if there’s actually a tax adjusted benefit at the end of their lifetime, after their financial plan has gone through. It’s very helpful to be able to look at an estimated tax return for somebody in their financial plan when we’re looking many years in advance. So, we can look at estimated tax returns, you know, 5-10, years out as well.
Cynthia de Fazio 07:37
And that’s so important to clarify, because so often people think, Well, I have a tax plan. I see my accountant once a year. That’s my plan. He does my taxes. But tax planning and tax preparation are totally different, correct, Philip?
Philip Capriotti, Jr. 07:49
Yes, absolutely. With tax planning, we want to look at your total financial plans, investment income stream, the tax situation. So, we want to create the income stream as tax efficiently as possible. We want to try to get as many years of tax-free growth out of these Roth conversions.
Cynthia de Fazio 08:10
I love that, Phil. Thank you so much. And Philip, wouldn’t you agree, before we take a commercial break, that by utilizing tools such as the Roth conversion that you can control when you pay taxes?
Philip Capriotti 08:21
Yep, I like paying taxes once and not having to worry about it ever again. So, and that’s really, as far as I can see, that’s the crux of executing a Roth conversion plan, not necessarily in retirement. You can do it prior to retirement. Many folks are doing that, you know, I’ll have folks come into our, my office and Phil’s office, and I’ll say, you know, can I retire? And they hate their job. They’ve been working in it 35-38 years, and I’m looking at their retirement account, 2.6, 2.7, 3.2, 1.7, million in their IRA. And I’ll say, and they have modest income goals. And I’ll say, not only can you retire, but you should retire. You should retire. Number one, for your peace of mind. Number two, about- by retiring and eliminating that 160,000, 170,000 in earned income, Now we can really go to work on converting that IRA in the 10, 12, and, you know, the effective tax rate of 15 to 17, 18% and folks, and I’ll tell them, we need to take money out for income, and then we’ll do Roth conversions. And they’re I wonder why my current advisor didn’t explain this to me. And I’m like, well, like we’ve been saying, your current advisor, unfortunately, not a tax advisor. You really need to wear both hats, and I believe my son Philip sees this on a regular basis as well in our Cedar Park office. So, my advice to you is, number one, pick up the phone and. And dial 888-818-6557, now don’t hang up. Leave a short message. Just say, I’m not really long winded, but I really want to make an appointment. Please call me back and we will or click the QR code go into fast-track mode, and you can also log into empowertaxbill.com we can do the legacy quiz, and we can also do the Roth quiz to help you determine whether tax efficient retirement income planning strategies will be beneficial to you and your family.
Cynthia de Fazio 10:33
Phil, thank you so much. Phil, thank you so much to our viewers at home. The number to call is 888-818-6557, and we’re talking about the importance of not only designing a retirement income plan, but also one that’s tax efficient for your retirement years. Well, how do you take advantage of that? You call in to 888-818-6557, and also two amazing quizzes that we have would be the empowertaxbill.com Again, empowertaxbill.com and empowerrothquiz.com. Are you in line to benefit from a Roth conversion? Wouldn’t you like to know the answer today while taxes are on sale, as we like to speak, don’t forget, call in, 888-818-6557, we’ll be right back after this very short commercial break.
Philip Capriotti 11:17
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 12:16
Welcome back to Retire Smart Austin. My name is Cynthia DeFazio, joined today by Phil Capriotti, Sr. and Phil Capriotti, Jr. of Empower Wealth and Tax and we’re talking all about the importance of building a solid retirement plan for your future, but more importantly, one that’s tax efficient as well, most important part of your retirement years, gentlemen, a great show we’re having today such a very important conversation that we’re sharing with the viewers at home. One of the other things I’m guessing would be to optimize retirement distributions. How does that go hand in hand with financial plan and being tax efficient?
Philip Capriotti 12:52
Phil, I’m going off the reservation with this one. Oh, okay, okay, and I’m going to break out brand new material all cutting edge. We have implemented through our Blackrock Association, okay? Because, as you probably know, if you work with this, you know that many of our portfolios, we have several dozen models where BlackRock, we use Blackrock analyst and technology. They actually build the portfolios and make changes in them. There. It’s called our core series. Well, many folks will come into the office and be like, you know, I don’t really have a lot of money in the IRA, but I have, you know, 1, 2, 5, 10 million in my taxable my investment portfolio. So, we just implemented new technology, and I know all of the advisors. And by the way, if you work with an Eddie Merrill or any other the Fisher guy, whoever call us, we need competent, qualified advisors. And we’ll help. We’ll show you how to use this technology. What we’re doing is we’re doing tax loss harvesting 25 to 26 times a year. So some folks say I have a lot of money in my investment account, but I and maybe I’ve already done my Roth conversions, but every year I get a 1099, or I get a K1 for 40, 50, 60, and I have to pay taxes on that income, and not only that, I never even take it out and spend it, so I’m paying taxes on dividends and interest that are growing in my taxable account. So, what we’re doing, and it’s just genius. You got to love BlackRock. May not care for their policies and politics, but being the largest investment management firm in the entire world, managing over $12 trillion really makes a difference. Yes, so we’ll sell losses, like every two weeks. I set it up for clients. Every two weeks, sell losses, sell some of the gains to create 0% tax bracket and zero. Percent taxable income. Wow. Now I can either take that monthly as tax free income, or I can reinvest it into new technologies like quantum computing, mini nuclear, whatever it happens to be, which we have a lot of this cutting-edge technology. So, folks are coming into the office. We’ve been doing it now for two years, I haven’t really openly talked about it. Next week, my young son, Phillip’s brother, Parker, has been working in this area, is going to explain it more detail. Okay, clients love it and a lot of the investment firms just not doing it. So, we can provide 60, 70, 100, $150,000 in tax free or tax efficient income, using tax loss harvesting, instead of doing it once a year or twice a year, four times a year. How about let’s do it 25, 26 times a year, especially when we see major sell offs in the market. So, when you have this technology plugged in if you’re taking advantage of it in your portfolio. Working with a true fiduciary that implements this type of technology, all of these pieces fit together, and they flow contiguously into a tax efficient retirement income plan.
Cynthia de Fazio 16:16
Amazing. That is amazing. And I love that you’re so brilliant about this. It’s incredible. Philip, I should ask you a question, if you’re using, obviously, tax benefits, if you will, does that increase your overall retirement income by having a solid tax strategy in place when you’re designing a financial plan?
Philip Capriotti, Jr. 16:37
It does absolutely, you know, a lot of times, a lot of different income can increase taxes in retirement. So, we need to look at the complete picture, all of the different income sources. What type of income is, W2, 1099, whether it’s interest, dividends, small ups, short term capital gains, long term capital gains, and look at it in the estimated tax return. So, make sure that it makes sense, and then check it. You know, at least twice a year. I like to do it after tax time and then again before the end of the year, so that we know when we do make a Roth conversion or something like that, to cause income we know what the income taxes are going to be.
Cynthia de Fazio 17:21
Very smart that way. You’re definitely always looking ahead and you’re not surprised. Another thing to not be surprised by would be your RMDs. How does having a tax strategy help plan your RMDs? Phil?
Philip Capriotti 17:33
Well, I’ve been saying this for years, without an RMD estimated RMD distribution report and without reviewing it yearly, these advisors are really missing the boat. And I don’t like the fact that some advisors say, check with your CPA. That’s and the old poppycock, I think, is one of the old English terms, right? Yes, it just doesn’t make any sense. Nowadays. We have so much technology, we have so much knowledge, and it’s ongoing, and that with AI, AI is truly helping us become better advisors. And if you’re not on, if you’re really not into the cutting edge, or on the cutting edge, I believe you’re not doing your client a true service. So, we like to do the tax loss harvesting, like I said, a dozen, dozens of times each year. We want to do Roth conversions a couple times a year. And this will help estimate. This will help and by the way, when we run a Morning Star report on an IRA or 401(k), this gives us estimated returns over the last 10 years, over the last 15, 20, years, it gives us internal fees and so forth, but the returns and what the client is spending will help us estimate what future RMDs are going to be at each and every age. If you’re not including that in your retirement income plan and it’s not written and reviewed yearly, you do not have a comprehensive retirement income plan, you have half a plan.
Cynthia de Fazio 19:04
Yes, and no one wants half a plan because then you are just planning to fail. It’s like walking around with one shoe yes or an umbrella with a hole in it. Phil, thank you so much. Phil, thank you so much to our viewers at home. As you can see, having a good tax strategy is so paramount for your retirement success. Well, how do you know that you have a tax efficient plan? Now, if you’re unsure, call in today. 888-818-6557, again, 888-818-6557, what you’re calling in for today is the opportunity to sit with Phil or Philip and let them get to know you, one on one. What are your income sources? Are you planning properly for taxes? Are you planning ahead for taxes? You could be hit hard if you’re not taking the proper steps to make sure that you can guarantee the money that you’ve worked so hard for will be protected with the right strategy. The number, again, is. 888-818-6557, or you can grab your smartphone click on the QR code at the bottom corner of your screen. And finally, two amazing tools to share with you, empowertaxbill.com and empowerrothquiz.com Once again, empowertaxbill.com or empowerrothquiz.com both will be beneficial to your overall tax strategy. We’ll be right back momentarily on Retire Smart Austin.
Philip Capriotti 20:26
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 21:16
Welcome back to Retire Smart Austin. My name is Cynthia DeFazio, joined today by Phil Capriotti, Sr. and Phil Capriotti, Jr. of Empower Wealth and Tax. And if you’re just joining us today, we’re talking about how it’s so important to have a tax efficient strategy with your retirement years. You want to have peace of mind and to make sure that Uncle Sam is not going to take too much of your nest egg. Gentlemen, this is such an amazing show, and it’s so important to share with our viewers at home, because you’re so passionate about proper tax planning in retirement. To have a financial plan that marries a tax plan, it’s perfect harmony, correct?
Philip Capriotti 21:53
It is. And I’m going to actually defer to my son, Philip, you know, we use different retirement income planning softwares okay? So, I’m kind of like the old bull, and he kind of like the young bull, right? Okay, and so the young and new and improved bull, so the technology that I use it, also it integrates with the tax return and so forth, but he uses this newer technology. And we’re not going to give the name of the retirement income planning because we don’t teach our competitor advisors unless they want to come and work and become part of the team, but tell Cynthia and the folks out there a little bit about all of the variables that go into your plan when you construct a tax efficient retirement income plan for A client that comes into our office.
Philip Capriotti, Jr. 22:40
Absolutely. Thank you. Yeah, everybody’s financial plan and tax plan is different, so we definitely have to make sure we’re looking at your unique, holistic financial plan and tax plan. A lot of folks have a lot of built-up capital gains in their portfolios right now, and if we are tactically and actively, actively managing the portfolio, this could be concerning, right? So, we want to be aware of how much capital gains we have, what the tax consequences are going to be. And the new technologies and Fintech is absolutely amazing.
Cynthia de Fazio 23:15
And I’m sure people are so relieved when you share with them that you can actually make some adjustments today to impact their future happiness years down the road. What does that feel like for you? Phil, to be able to deliver news like that.
Philip Capriotti, Jr. 23:27
It’s excellent. I love my job. It’s great. We help people retire tax efficiently every day.
Cynthia de Fazio 23:35
Yes, and that’s so important. Phil, you were going to say something.
Philip Capriotti 23:39
I was going to just jump in there, folks, I would tell you this many, many advisors are talking about it, and it kind of just concerns me, with respect to folks, for those of you who are charitably inclined, I need you to understand, you do not have to wait to do QCDs until your first RMD. So, for instance, by the way, a QCD is a qualified charitable distribution, okay, a qualified charitable distribution has to come from a qualified plan, an IRA, a 401(k) or so forth. Let’s talk about IRA. So QCDs are allowed to be taken at age 70 and a half, okay, and you can contribute up to $108,000 a year to one or multiple charities and get it out of your IRA. So, for those folks that have 3, 4, 5, million or more, we see them a lot, but they are charitably inclined. They’re writing a check to the charity, and they’re over 70 and a half, but they’re not taking RMDs because maybe their first RMD is until 73 so many folks will come in and. My office, and they’ll say, Phil, I thought I had to wait till RMD- until I’m receiving RMDs to do QCDs. Not true. So. QCDs, this is part of the new tax bill as well. You can take QCDs from that qualified account at 70 and a half the year you turn seven and a half, and you can contribute up to 108,000 per year. This is extremely important tax advice, and it should also be weighed into the retirement income plan when we’re structuring Roth conversions, because I may want to convert half of my IRA to a Roth I don’t need any more, and then the other half, I want to contribute to my charities through my lifetime and my wife’s lifetime. So, with that being said, make sure that your financial advisor is talking with you about it, and if they are not, I don’t know why you haven’t called yet. Yeah, that’s true, honestly. So, click the QR code in your lower left-hand corner or call 888-818-6557, I we’ve and a lot of these new tax laws. You know, they come in piecemeal. We’ve had three different changes to the tax code just this year. Just this year.
Cynthia de Fazio 26:14
You have to keep abreast of all of this.
Philip Capriotti 26:16
You have to. You really have to and so I would also say, if you’re not working with a firm that’s an ED slot master related advisory firm, there many times they’re not staying up to date. A lot of these advisors are lazy, and they just say, talk to your CPA about it. Really you should be getting all that information for one source, your financial advisor, who’s also your fiduciary and your tax advisor, this is a big part of tax efficient retirement income planning, and my son, Philip and I will both implement it into your retirement income plan. I’m talking about the QCD planning, Phil.
Cynthia de Fazio 26:52
Phil, and are you finding (we only have a minute left) that most people are failing to have a tax plan when they first come in to see you?
Philip Capriotti, Jr. 26:59
Absolutely most people do not know. Most people have no clue the effects of the tax efficient retirement plan and how much it benefits your tax adjusted ending assets.
Cynthia de Fazio 27:09
Thank you, Phil. Thank you, Phil. To the viewers at home, most specifically, thank you for spending time with us on Retire Smart Austin, as you can clearly see, it’s so imperative to have a tax planning strategy in place. When it comes to the retirement years, you’ve worked very hard to get there. You deserve to keep as much of your nest egg as possible. You need a plan. Call in today, 888-818-6557, or we’ve made it simpler. If you need a media service, please pick up your cell phone. Click the QR code at the bottom corner of your screen that gets you on the fast track faster with Empower Wealth and Tax. Be safe, be happy, be blessed. We’ll see you back one week from today. Thank you for spending time with us. Thanks, Cynthia. Appreciate you, Phil. Thank you.