Tax rules change, and the bill you pay in retirement depends on decisions you make now. A tax-deferred account lets your money compound for years, unfettered by income taxes. We help you decide which accounts to fill, and when to draw from them.
Where you hold an investment can matter nearly as much as what you hold. Tax-deferred accounts — traditional 401(k)s, IRAs, SEPs, and annuities — let your contributions compound without an annual tax drag, with taxes owed only as you withdraw. Tax-free accounts — Roth IRAs, Roth 401(k)s, and HSAs — are funded with after-tax dollars, but qualified withdrawals come out free of federal income tax, and Roth IRAs carry no required minimum distributions during the original owner's lifetime. Most households are best served by building balances in both. Doing so gives you a lever to pull in retirement: the ability to choose which account you draw from in a given year, and in doing so manage your taxable income around bracket thresholds, Medicare premium surcharges, and the taxation of your Social Security benefits. We help you decide how much to direct to each type of account and which assets belong where — a discipline known as asset location.
Not every dollar can live in a retirement account, and taxable brokerage accounts have an advantage of their own: a decline on paper can still be put to work. Tax-loss harvesting is the practice of selling a position that has fallen below its cost basis, realizing the loss, and reinvesting the proceeds in a similar — but not substantially identical — investment so your overall allocation stays intact. Those realized losses offset realized capital gains dollar for dollar; up to $3,000 of net losses can be applied against ordinary income each year, and anything beyond that carries forward indefinitely. Executed carefully, with attention to the IRS wash-sale rule, holding periods, and your cost-basis method, harvesting can reduce this year's tax bill and bank losses against future gains — including gains you may want to realize during a rebalance or a business sale. We watch taxable accounts for these opportunities throughout the year, rather than scrambling for them in December.
Section 1031 lets an investor defer capital gains tax on the sale of investment real estate by reinvesting the proceeds in a "like kind" property. The gain is not erased — it carries forward in your basis until a later taxable sale. Doing it properly takes strict timing and documentation, and families have used the rule for decades to defer capital gains and manage the tax impact of real estate passing to their heirs. We can walk you through the requirements and coordinate a turnkey exchange.
In several cases, 1031 Exchanges are completed by the investment property owner with the help of a real estate agent. However, there is another alternative — a passive solution to satisfying a 1031 Exchange — and that is a Delaware Statutory Trust (DST).
Properly structured DSTs are recognized by the IRS as qualified replacement property for real property. Investors in a DST are not direct owners of the real estate. The trust holds title to the property, for the benefit of many investors, each of whom has a "beneficial interest" and is treated as owning an undivided fractional interest in the property.
Simply put, DSTs can provide a turn-key solution for investors who may not have the time, energy or real estate expertise to find and manage a replacement property, and they can be used for all or a portion of the sale proceeds. Be mindful of the trade-offs: DSTs are illiquid securities with no public market, they carry fees and expenses, investors give up day-to-day control of the property, distributions are not guaranteed, and you can lose principal. They are generally offered only to accredited investors, and suitability depends on your particular situation.
One conversation is usually enough to tell whether there's tax worth saving. There's no cost to have it.
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