Q: Taxes—not exactly everybody's favorite topic?
A: But when you're talking about saving on taxes and saving for retirement at the same time, that's a better conversation.
Q: Assuming that bulking up retirement savings is the starting point, what's some of the most important advice you can offer at tax time?
A: Max out your retirement plans—wisely. And if you don't have a good CPA, get one.
Q: Why the emphasis on a CPA?
A: We always look at each individual case with an eye for how we can help with the tax situation. But we also always recommend a good accountant or CPA, especially now when we may see a lot of changes in taxation.
Q: Back to bulking up retirement savings. What's the best approach there?
A: It's really important to understand all the options out there and which ones are right for your unique financial position, from tax bracket to long-range goals and estate planning. We help to make that as simple as possible across a wide range of possibilities.
Q: The range of possibilities—is that from traditional to Roth IRAs?
A: It's much broader. There are opportunities ranging from a 403(b) to an SEP.
Q: Let's start with the 403(b).
A: A 403(b) is available to employees of some governmental agencies, municipalities or other non-profits. The difference between this and a 401(k) is that administrative costs can be lower for a 403(b). When that's an option, we can look into maximizing that advantage based on the investments we recommend.
Q: What about the SEP?
A: It stands for Simplified Employee Pension. An SEP plan can allow a much higher contribution limit, though whatever percentage of income employers contribute for themselves must also be contributed for employees. It's a matter of scale. For larger companies, it won't work, but it can be a tremendous benefit in some small-business situations.
Q: Any other tax-saving strategies we should consider?
A: Yes—first, there's taking advantage of any underperforming investments. If you have current investments that are at a loss, it's possible to sell those and carry that forward as either a short-term or long-term capital gains loss. It's even possible to buy the same investments back after taking the tax losses and then waiting the required 30 days. Second, there's an opportunity with municipal bonds.
Q: What's the advantage to municipal bonds?
A: Tax-free income. You're basically loaning money to a municipality, and there's no taxation on the interest income from that.
Q: You're right—the tax-saving conversation is more interesting than some of us might expect.
A: It is great any time we can help someone see a way to save on taxes and save for their retirement. It is especially a win when someone sees the potential to save instead of spending on something that may not have value later in life.

This material has been provided for general informational purposes only and is not intended to be a substitute for specific individualized tax or legal advice. Neither LPL Financial, nor its registered representatives, offer tax or legal advice. We recommend you consult with your own tax or legal counsel for advice regarding your specific situation.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. Municipal bonds are subject to availability and change in price. They are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply. If sold prior to maturity, capital gains tax could apply.

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