Slott, Levine: 7 Useful Facts About Tax Diversification and Retirement

As a financial planning concept, the subject of tax diversification is relatively simple: It means utilizing a number of different types of investing and savings accounts that are taxed differently for federal and state income tax purposes.

But, as explored in the latest episode of the Great Retirement Debate podcast hosted by Ed Slott and Jeff Levine, putting the concept of tax diversification into practice is anything but simple, especially when it comes to planning for retirement.

Slott, a nationally recognized IRA expert and founder of Ed Slott and Co., and Levine, the chief planning officer of Buckingham Strategic Wealth, say the tax diversification challenge stems from two principal factors. On the one hand, the tax laws applying to different types of investment accounts are complex and always changing, and on the other hand, nobody knows exactly what the future holds in terms of a client’s longevity or income needs.

As such, Slott and Levine agree, when it comes to tax-smart retirement investing, there are many rules of thumb but very few absolutes. In order to help clients achieve anything like optimal tax efficiency in the investing and income planning process, a lot of analysis will be demanded, as will collaboration with skilled tax professionals.

See the slideshow for seven useful tips put forward by Slott and Levine during their latest retirement debate, and take note, new episodes of the Great Retirement Debate podcast drop every Thursday on all major streaming platforms, including Spotify, Apple, Stitcher and Amazon.