When saving for retirement, it’s easy to funnel money into a pre-tax 401(k) plan or individual retirement account without planning for future taxes. Those pre-tax funds, however, can be handy in some cases, experts say.

Often, investors roll pre-tax 401(k) accounts into traditional IRAs, and the withdrawals in retirement trigger regular income taxes, depending on your tax bracket. 

“Your IRA is an IOU to the IRS,” certified public accountant Ed Slott said during a session last week at the Horizons retirement planning conference in Coronado, California.  

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With uncertain future tax rates, Slott pushes for savings in after-tax Roth accounts, which won’t incur taxes in retirement. He also likes to use Roth conversions.

Roth conversions move pretax or nondeductible IRA funds to a Roth IRA, which can kick-start tax-free growth after an upfront tax bill. 

However, there are scenarios where keeping some money in your pre-tax IRA makes sense, Slott said. 

Certified public accountant Jeff Levine agreed. He told CNBC he prefers some “dry powder” — pre-tax money in retirement accounts that can be strategically withdrawn for planning opportunities.

By comparison, “you’ve already paid your tax bill” with after-tax Roth accounts, he said.

A 2022 research brief from the Department of Health and Human Services found 56% of Americans turning 65 that year will develop a condition that requires long-term care services.

Whether it’s in-home health aids or assisted living facilities, long-term care expenses are rising, according to Genworth’s annual survey. 

But the medical expense deduction could help offset those costs, according to Levine. For 2025, you can claim the tax break for expenses that exceed 7.5% of your adjusted gross income for the year.

If you itemize tax breaks, the deduction reduces the amount of your income subject to tax. That means part of the medical expense deduction could be lost if your income is too low.

“You wipe it out,” Levine said.

But that issue could be solved with a large pre-tax IRA withdrawal in the year of high long-term care expenses, which boosts your adjusted gross income for that year, he said.

Slott was referring to qualified charitable distributions, or QCDs, which are direct transfers from an individual retirement account to a non-profit organization. You must be age 70½ or older to qualify for a QCD.

While there’s no tax deduction for a QCD, the transfer is excluded from your income, meaning it won’t boost your adjusted gross income.  

If you want to leave assets to charity and adult children after death, pre-tax IRAs are less attractive for your heirs because they must follow the “10-year rule,” and empty accounts within 10 years of the original owner’s death.

Under the Servicemembers Civil Relief Act, state income tax is based on your “state of legal residence” during active duty, regardless of where you’re stationed. If eligible, it’s possible to keep that residency through your military career.

“Military members tend to have residency in states without an income tax,” such as Florida, Texas or Washington, said CFP Curtis Sheldon, who is also an enrolled agent at C.L. Sheldon and Company in Alexandria, Va. The firm specializes in working with active and retired military members. 

Another unique benefit for service members is tax-exempt “allowances,” Sheldon said.

Generally, pay is taxable, whereas most allowances — such as funds for housing and food — are tax-exempt, he explained.

“They don’t get reported anywhere on the tax return,” and these items don’t show up on Form W-2, he said. “It’s something you have to keep track of yourself.”

When selling a primary residence, many homeowners can exclude a portion of profits from capital gains taxes. 

Generally, the limit is $250,000 for single filers or $500,000 for married couples filing jointly. But you must meet the “use test” by living in the home for two of the last five years before the sale.

That rule is suspended for members of the armed forces, Sheldon said: “You get to stop the clock.”

That means it’s still possible to qualify for the tax break, even without meeting the two-year use test, if you lived elsewhere while on “qualified official extended duty,” according to the IRS. 

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President Donald Trump‘s efforts to slash federal government spending has ignited a new debate about the future of Social Security.

One idea that has been brought up before — privatizing the now public program — is getting new attention.

At the BlackRock retirement summit in Washington, D.C., on Wednesday, CEO Larry Fink said he supports more individual ownership in Social Security, though he said he would not necessarily use the term privatizing because it has toxic connotations.

“The problem we have now, we have a plan called Social Security that doesn’t grow with the economy,” Fink said.

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Social Security is a pay-as-you-go system — today’s payroll tax contributions generally fund benefits for current retirees and other beneficiaries.

Any leftover money that is not used to either pay benefits or fund the program’s administrative costs is put into the program’s trust funds. That money is invested in special Treasury bonds that earn a market rate of interest and which are guaranteed by the U.S. government, according to the Social Security Administration.

Privatizing the program could provide a way to invest money on behalf of individual workers that potentially earns a higher return, according to supporters of the idea.

“If we create a plan that every American can grow with our economy, they’re going to feel more attached to our economy,” Fink said.

Larson believes the Trump administration’s goal is to privatize Social Security. When asked for comment, the White House referred CNBC to a new fact sheet issued this week affirming, “President Trump will always protect Social Security, Medicare.” That document does not mention privatizing the program.

House Ways and Means lawmakers on Wednesday voted to block a full House vote on a resolution of inquiry that Larson proposed to require disclosure of so-called Department of Government Efficiency activity at the Social Security Administration. At the hearing, Larson said he is concerned the Trump administration could try to privatize the program.

“We, I think, are in real battle here, and it’s really, in many respects, not unlike the battle that Roosevelt faced initially,” Larson told CNBC.com on Tuesday.