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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I really find this an interesting question and wonder who's going to benefit by the advisors recommendation. I could thoroughly understand maxing out contributions to the 457 plan but taking your taxable income to zero doesn't really seem to make much sense. If your total gross income from wages is $57,000 and assuming you have some other smaller amounts of income, you're not necessarily in a high tax bracket to begin with.  It seems kind of foolish to waste the deductions which would also include your personal exemption's that you would probably have close to $20,000 of taxable income that would generate a tax, at the federal level ,of almost 0. There really is not enough information to give you a specific recommendation except to say be careful and although there are significant advantages to contributions to the 457 plan in the form of current tax deductions, you might want to begin the project what your taxable income would be in your years of retirement. This may be a ways off but, it's worth considering. I hope this helps a little and good luck.

August 2017
August 2017
August 2017
August 2017