Episode•August 18, 2022•19 min

Saving Money on Taxes with Lance Belline | Ep. 131

Lance joins Tiffany this week to discuss strategies everyone should adopt in order to save money on taxes. About Our Guest Throughout his two decade career as a Financial Advisor, Lance has defined “or fine-tuned” his PURPOSE. Which is developing lifelong relationships with his clients and providing them financial confidence and clarity of how they are going to accomplish their goals. Lance prides himself in being able to explain all the details and complex issues in a clear language that his clients can understand. Lance's philosophy in life is to follow 3 simply rules; God, Family, Work. Growing up in Lamar, Missouri, his parents instilled in him the values that he strives to live by each and every day. He strongly believes in the power of community service and reaching out to those in need. Lance and his wife and three children reside in Fayetteville and they try to instill those same values in their children. He also enjoys spending time golfing, hunting, snow skiing, water skiing, and Crossfit. Connect with Lance Website: https://www.lhfinancial.net/ LinkedIn: https://www.linkedin.com/in/lancebelline Email: [email protected] Facebook: www.facebook.com/lance.belline Connect with Tiffany on Social Media Facebook: Money Talk With Tiff Twitter: @moneytalkwitht Instagram: @moneytalkwitht LinkedIn: Tiffany This podcast uses the following third-party services for analysis: Podcorn - https://podcorn.com/privacy OP3 - https://op3.dev/privacy

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Key Takeaways

1
Think lifetime tax strategy, not just year-to-year
Focus on reducing taxes during the distribution (retirement) phase rather than only the accumulation phase
Strategic bucket allocation allows dramatically lower lifetime tax burden
2
Use three tax buckets for optimal retirement tax savings
Pre-tax bucket (traditional IRA/401k): money goes in pre-tax, taxed on withdrawal
After-tax bucket (investments): already-taxed money, subject to capital gains
Tax-free bucket (Roth IRA/401k, HSA): money goes in after-tax, comes out tax-free
3
Reverse bucket order for accumulation vs. distribution
Accumulation phase: prioritize bucket 3 (tax-free), then 2, then 1
Distribution phase: withdraw from bucket 1 first, then 2, then 3 to minimize taxable income
4
Qualify for 0% capital gains tax rate in retirement
Keep taxable income under $83,850 to access 0% long-term capital gains rate
Example: $120k retirement income with only $14,100 taxable = ~1.5% effective tax rate
5
Small daily sacrifices compound into significant wealth
Skipping one $2 Coke daily = $40/month saved
$40/month invested over 10 years = over $10,000

Intro

Lance Belline joins Tiffany to discuss tax-saving strategies that focus on lifetime wealth optimization rather than annual tax planning.
Lance Belline is a Certified Financial Planner with over 20 years of experience. After 15 years as a traditional advisor, he shifted focus to helping clients reduce or eliminate taxes paid to the IRS through strategic wealth accumulation. He is the author of 'More Wealth, Less Taxes.'

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– Two Phases of Life: Accumulation vs. Distribution

Lance explains that tax strategy differs dramatically between working years (accumulation) and retirement (distribution). During accumulation, it's harder to reduce taxes due to W-2 or self-employment income, but strategic planning in these years enables major tax savings during distribution.

– The Three Tax Buckets Explained

Lance breaks down the three categories for saving and investing:

Pre-tax bucket (IRA, 401k): Contributions are pre-tax, growth is tax-deferred, withdrawals are taxed as income
After-tax bucket: Excess income invested in stocks, bonds, real estate; subject to annual taxes on interest and capital gains
Tax-free bucket (Roth IRA, Roth 401k, HSA): Contributions are after-tax, qualified withdrawals are completely tax-free

The more you contribute to buckets two and three, the more you're going to decrease the amount of income that's taxable in your retirement years.
– Lance Belline

– How to Pay Only 1.5% Tax Rate in Retirement

Lance walks through a specific example showing how strategic bucket allocation allows someone to withdraw $120,000 in retirement while only paying taxes on $14,100:

Take $40k from pre-tax bucket, subtract $25,900 standard deduction = $14,100 taxable income
This $14,100 falls under the 12% bracket threshold ($83,850), qualifying for 0% capital gains rate
Withdraw $40k from after-tax bucket at 0% capital gains tax
Withdraw $40k from tax-free bucket with no tax owed
Total tax: $1,410 on $120,000 income (~1.5% effective rate)

– The 3-2-1 / 1-2-3 Strategy

Tiffany synthesizes the bucket strategy into an easy-to-remember framework: contribute in reverse order (3-2-1) during accumulation years, then withdraw in forward order (1-2-3) during distribution years to minimize taxable income.

– The $10,000 Coke: Finding Money to Invest

Lance shares a simple example: skipping one $2 Coke per day saves $40/month. Over 10 years at a reasonable investment return, this becomes over $10,000. He emphasizes that everyone has some daily or weekly spending that could be redirected to investing without major sacrifice.

Books Mentioned

More Wealth, Less Taxes by Lance Belline

Resources

Topics

tax strategyretirement planningfinancial bucketstax-free investingRoth IRA401kcapital gains taxwealth accumulationdistribution planningfinancial education