How to plan for retirement with your taxes

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Tim Speiss, Eisner Amper Partner, joins Yahoo Finance to explain how taxes play a role in planning for retirement.

Video Transcript

ADAM SHAPIRO: Let’s switch gears right now. Everybody has to plan for retirement, and this is the time of year where you also have to take into consideration the tax tips that go with planning for retirement. This next segment, by the way, is part of our retirement series brought to you by Fidelity Investments.

And helping us plan for the future is Tim Speiss, Eisner Amper. He’s a partner there, and it’s good to have you back with us.

TIM SPEISS: Thank you.

ADAM SHAPIRO: What’s the biggest thing– I mean, the majority of us, if we’re doing the 401(k), I don’t think we have to worry about the tax implications of investing through a 401(k). But what about the 1% or the Grey Poupon crowd? What’s on mind for them as the year gets ready to close out with retirement planning?

TIM SPEISS: Well, first off, I mean, you’re right. 401(k) plans are extremely popular. They have limitations with respect to how much you can defer pretax, and then you can do post-tax. But there’s also deferred compensation plans, which have no limitations per se. They’re not secured by any ERISA rules or so forth. They are subject to the claims of creditors. That’s the second option beyond 401(k)s.

And then there’s also products such as insurance products where you can put inside of a cash surrender value of a policy vis-a-vis payments amounts that can grow tax deferred– not tax free, eventually taxable, but tax deferred. And you have various investment options in all three scenarios, and there’s others.

ADAM SHAPIRO: Are there new– our there new allowable deductions, or are these the same old that always have been in place?

TIM SPEISS: Yes, I would say if we’re speaking about defined benefit plans, which is a pension calculation as far as how much funding can go in actuarially. I talked about the 401(k) that has set amounts you can defer annually.

It’s when you get into what’s called the nonqualified plans, plans that are not necessarily governed by the Internal Revenue Code. I provided one example using life insurance. With these nonqualified plans, quote, unquote, there are opportunities for significant deferrals, significant investments that can be utilized upon retirement.

ADAM SHAPIRO: So as we wrap this up– and I apologize for our short timing– should people, because of the tax law changes that took place a while ago, should they be concerned about charitable contributions, especially since there’s no longer a state and local tax deduction where if you’re itemizing, you know, generous contributions would have added up?

TIM SPEISS: Right. Well, that’s a great question. Yes, they’re not any longer deductible. I would say to any of your viewers that have businesses, perhaps use the business to make the contributions. Many of our clients are philanthropic, and they also own and control business entities of various sizes. And so if the tax incentive is important, you can certainly just use another vehicle.

And there’s also– you talked about retirement planning. There’s also estate planning as part of retirement planning where you can leave gifts at the time of your passing that can reduce your estate tax. And there’s also deferred annuities.

So there’s many ways to still have benefits economically from a tax perspective beyond–


TIM SPEISS: –the $10,000 limitation on the annual tax return.

ADAM SHAPIRO: Tim Speiss, Eisner Amper, a partner there, we appreciate your–