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Tax Efficient Planning

The Clock Is Ticking, But There Are Many Things You Can Do To Minimize Your Tax Burden for 2022 and Beyond

Following is a brief description of powerful, but under-utilized, strategies for reducing taxation, lowering risk and maximizing your hard-earned dollars. 

Cash Balance Retirement Plans 
Want to contribute $100,000-750,000 on a tax-deductible basis towards retirement?
For high-income business owners with less than 25 employees, a combination of 401k, profit sharing, super Roth and cash balance pension plan allows for maximum tax-deductible contributions to help turbocharge your retirement savings.  

Captive Insurance Companies 
Huge premium savings for business owners on their business insurance premiums, while providing significant tax savings now (and down the road).
A well-structured and managed captive insurance company provides impressive tax savings opportunities and risk reduction, while also allowing up to $2.2M of current income tax deductions per year, plus ongoing tax benefits later. For small businesses with over $10M/year of revenues, if a captive fits, it is one of the most powerful planning strategies available. 

Strategic ROTH Conversions
Most professionals think tax rates are going up, reinforced by the most recent Biden tax proposals. Taking advantage of the various tax brackets and converting traditional 401k and IRA’s to Roth make tremendous sense. Additionally, many people could benefit from making sizeable contributions to donor-advised funds this year and pairing the charitable tax deduction from this gift (that will fund future charitable contributions to their preferred causes) with ROTH conversion. This allows you to turn future taxable dollars into tax-free ROTH’s for you and your spouse’s lifetimes, plus 10 years beyond your deaths for your heirs.   

Energy Production Funds
Lowering our reliance on oil and natural gas imports and instead using domestic reserves help to increase our nation's energy independence. Congress has offered generous tax breaks for years to encourage domestic oil and natural gas production. Numerous tax benefits are available for these drilling projects, and the benefits can significantly improve the economics of this asset class. 
Typical funds provide 70-92% immediate tax deductions based on the dollar amount invested from intangible drilling costs (labor, fuel, supplies, surveying, etc.). This means that for a $100,000 investment, the investor will receive an immediate deduction of $70,000-$92,000. Additionally, as the cash flow from these investments is distributed, approximately 30-40% of the return is also tax-free due to other income tax deductions.

Qualified Leverage Strategy™ for large retirement plans
The Qualified Leverage Strategy (QLS) is a tax-efficient method of accessing money from qualified retirement plans and creates two buckets of tax-free money for the rest of your lives. It also immediately lowers the burden of required distributions for those 72 or older. QLS enables participants to maximize assets going to beneficiaries, reduce taxes on assets in qualified plans and increase cash flow and the amount left to heirs or charity. 
It is one of the few investments that can offer tax-deferred growth, tax-free access to the policy's cash value during life, a tax-free death benefit and the creation of a large ROTH IRA from assets that were previously taxable. 

Life insurance
One of the most misunderstood and under-utilized financial tools available is (gasp) life insurance. Tax-deferred growth and tax-free access to income during life, plus income tax and estate tax-free death benefits mean you will be lowering your tax burden for the rest of your lives. As a wealth replacement tool, it can make up for the unavoidable income and estate taxes you may face. It also, from a rate of return comparison, can deliver what no other investment can provide…check it out!
For more information about these powerful tax-reduction strategies, feel free to reach out to your Impact Wealth team.  

Your Impact Wealth Team
(303) 645-4800 or

“I'm proud to pay taxes in the United States; the only thing is, I could be just as proud for half the money.” ~Arthur Godfrey