If all of my income is in a deferred compensation plan, will I still be able to make itemized deductions?

I received a non-taxable inheritance in 2016 of approximately $250,000. I invested the inheritance, and I am drawing on it for living expenses. My financial advisor recommended I put my entire annual salary of $57,000 into a 457 Plan for the next two years in an attempt to be places in a lower tax bracket during retirement. However, I currently have itemized deductions of about $11,000 per year as a result of property taxes, mortgage interest, and medical expenses. If i have no taxable income in 2017 and 2018 because I am putting my entire salary into a 457 Plan, will I lose the value of my itemized deductions?

Career / Compensation, Financial Planning, Estate Planning
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August 2017
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In general I love the idea of maxing out your 457 plan to minimize you tax bill.  Where you lose me is the benefit to maxing it out if you are putting your entire income and losing your other itemized deductions. Technically your itemized deductions will be deductible but THEY WON'T LOWER YOUR TAX BILL. So it is like you are losing them.

If you have roughly $11,000 in itemized deductions it may make more sense to put say $46,000 into the 457plan to pay no income taxes this year and next.  This is assuming you don't need the money before retirement.

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DAVID RAE, CFP®, AIF® is a Los Angeles-based  financial planner with DRM Wealth Management, a regular contributor to Advocate MagazineHuffington PostInvestopedia not to mention numerous TV appearances.  He helps smart people across the USA get on track for their financial goals.  For more information visit his website at www.davidraefp.com or the Fiduciary Financial Planner LA blog.

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