• Wed. Apr 24th, 2024

Here’s how I tackle tax planning as a certified financial planner

Seksan Mongkhonkhamsao | Moment | Getty Images

Roughly 10 years ago, I began shifting careers from concert promoter to personal finance journalist. Back then, I thought about taxes exactly once per year — when it was time to file my annual return.

Now, as a tax reporter for CNBC, I focus on tax strategy all year, including how retirement contribution decisions may affect long-term plans. It helps that I am one of a handful of working journalists to have earned the certified financial planner designation.

Over the years, I’ve learned tax planning can’t happen in a silo because today’s decisions often have future consequences.

Certain tax moves are “like a balloon,” Ashton Lawrence, CFP and director at Mariner Wealth Advisors in Greenville, South Carolina, once told me. “If you squeeze it at one end, you’re going to inflate it somewhere else.”

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Here’s a look at more coverage in CNBC’s Women & Wealth special report, where we explore ways women can increase income, save and make the most of opportunities.

Here’s how I’ve tackled tax planning in my portfolio, and how my strategy has changed over the past decade.

Pretax vs. Roth retirement contributions

Early in my career, I focused on Roth savings, which made sense with lower income and decades until retirement. But it’s tough to predict future brackets, so I’ve shifted to tax diversification across investing accounts.

I’ve prioritized my employer match with pretax and Roth 401(k) deferrals, while also making Roth individual retirement account contributions. I’ve also funneled extra money into my taxable brokerage account, which incurs capital gains taxes on earnings yearly, but can be tapped before retirement.

There’s also a small nest egg in my health savings account, which I added to during my years of self-employment. I’ve invested the balance and hope to make tax-free withdrawals for medical expenses in retirement.

Tax diversification offers flexibility

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