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By Christine Benz | 06-24-2010 12:55 PM

One Thing Investors Can Control

T. Rowe Price senior financial planner Christine Fahlund on gaining flexibility and control over an uncertain future tax environment.

Christine Benz: Hi. I'm Christine Benz for here at the Morningstar Investment Conference. Managing a retirement portfolio for tax efficiency and for optimal tax management is a big piece of the retirement planning process, but it's also an under-recognized one.

Here to share some insights on this topic is Christine Fahlund. Chris is the senior financial planner and also a vice president at T. Rowe Price. Chris, thanks so much for being here today.

Christine Fahlund: Thank you. My pleasure.

Benz: So let's talk about some ways to think about tax management, and the nice thing about it is that it's something that investors really can control, as opposed to a lot of the other pieces of the retirement planning process. So let's talk about some tips for getting the most out of retirement assets with proper tax management.

Fahlund: Okay. Well, for one thing, you know, when you are accumulating money, the taxes don't matter as much because you're going to be saving in tax deferred accounts primarily, and so what is there to worry about? But when you think about it a little further, you realize that once you get into a retirement, it's a whole different ballgame because every time you withdraw assets from an account, they are probably going to be taxable events.

Benz: Unless they are Roth assets.

Fahlund: Unless they are Roth assets. So – if we start with the understanding that that's inevitable, that we're going to end up with taxable events, then let's start, while you are in accumulation, diversifying your accounts so that you don't simply end up with one tax-deferred IRA, for example, rollover, but instead, you have some money in taxable accounts and you have some money in Roth IRAs.

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