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Tax Strategy: Did your advisor even try?

Tax Strategy: Did your advisor even try?

March 06, 2015

Every year as the holiday season passes, a new and stressful time of year rolls by, tax season. All of a sudden, it becomes a period of collecting tax documents followed by the dreaded question to your CPA of “how bad is it?". Many times, financial advisors employ a strategy of set it and forget it. Well, I say forget that! We believe there are four key ways that we can add value to you and your retirement plans.

  1. Tax Loss Harvesting- This takes place when one of your assets has a short-term, unrealized loss and we decide to capture this loss by selling the security. We can then offset these losses against any similar gains in your account. This can help reduce your short-term tax liability. If you feel you do not want to miss a potential rebound in the sold investment, you will have to stay out of that same investment for 30 days due to the wash sale rules. The solution to this is to buy another security that tracks closely to the security you sold. The replacement security can be an index fund or another closely related security. 
  2. Asset Location Planning- This is where you place your least tax efficient assets in tax deferred accounts such as your Individual Retirement Account (IRA) or Employer Sponsored plans (401(k) etc). Assets to consider with this planning could include taxable bonds and actively traded tactical strategies. Outside of your retirement plan, your investment strategy can hold master limited partnerships, real estate investment trusts and dividend paying stocks. These structures all have some form of tax advantage in being placed in non-qualified, currently taxable accounts. 
  3. Maximizing Retirement Accounts- Whether you are still working, own a business or still do some consulting work for the company you retired from a few years ago, there are options for you. It could be setting up IRA’s or Simplified Employee Pension Plans (SEPs) that are simple in nature or you can utilize pension options that can potentially allow you to pretax defer hundreds of thousands of dollars of income per year. These are options that can be considered for your direct benefit. 
  4. Working as a Team- You are the team leader, the CEO, Partner and Boss, but your Accountant and Financial Advisor should team-up to share information with you to assist you with maximizing your wealth and income. 

The simple result of the preceding is for the betterment of your overall financial plan. Here at Nabell Winslow Investments we take pride in formulating strategies to meet your goals. Who does your advisor work for? We think it should be you!

Scott A. Winslow, ChFC
Managing Partner
Nabell Winslow Investment

Securities and advisory services offered through Cetera Advisors LLC, member FINRA, SIPC. Cetera is under separate ownership from any other named entity. The information in this article is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult your legal or tax professional for specific information regarding your individual situation.