Understand the Order of Money
An order exists to how clients should accumulate money and take distribution upon retirement to help increase net after-tax cash flow. We leverage the tax-efficient funnels tool to help them visualize how to save for retirement and turn retirement assets into tax-efficient income.
Measure Your Tax Bracket
The U.S. tax system is a dynamic pay-as-you-go system, and many opportunities for proactive tax management lie within the brackets. We use a tax measuring cup visual aid to educate clients on ordinary income tax brackets and capital gain tax rates. It also illustrates annual tax management opportunities.
Avoid Marginal Tax Traps
Unfortunately, tax traps exist in the code. Within this concept, we share ways to articulate the importance of proactive tax management:
- Before your client takes major withdrawals from their retirement accounts
- Before they elect to receive Social Security income
Allocate Tax-Sensitive Assets
It’s not about what you make; it’s about what you get to keep. Taxes can create a major drag on investment returns. It’s never been more important to ensure you allocate your client accounts with the right type of investments. That means not just diversification but also from a taxation perspective.
We have tools that illustrate to clients that there are certain investments they should hold in their retirement accounts vs. their post-tax accounts vs. their tax-advantaged accounts for increased efficiency.
Use Gifting Strategies
Within this concept of tax management, we arm you with tools to help your clients maximize both charitable and intra-family gifting. By doing so, they minimize their income tax and their families’ future transfer tax management advice, ensuring wealth passes efficiently to the next generation.
Understand Pay Now vs. Pay Later
Everyone has to pay taxes, but the U.S. tax system allows flexibility on when you pay. You can defer income through retirement accounts or deferred asset sales. Or you can recognize income through Roth conversions or strategically timed asset sales.
This creates incredible opportunities to amplify your value with proactive tax management of these accounts and assets.
Manage Your Dynamic Bracket
Tax management is a moving bull’s-eye. Your clients’ personal circumstances change each year. Tax management is about evaluating the tax policy landscape and your clients’ unique needs. Then, you strategically think several moves ahead to ensure you maximize their income and minimize their taxes.
