Where you hold investments matters as much as what you hold.
Most high-net-worth individuals hold assets across multiple account types (e.g., traditional 401(k)s or IRAs, Roth accounts, taxable brokerage accounts, HSAs, or 529s). Each offers different tax treatment: some provide upfront deductions with taxed withdrawals later, others offer tax-free growth and distributions, still others provide no special tax benefits but maximum flexibility.
Yet many investors treat these accounts independently, missing opportunities that emerge when you think strategically about which investments belong where. The right positioning across account types can significantly reduce lifetime tax liability and increase after-tax wealth.
Without strategic coordination, you’re likely leaving money on the table:
Strategic use of tax-advantaged accounts helps you minimize tax drag on growth, optimize withdrawal strategies, and structure your portfolio for maximum tax efficiency.
When your investments are thoughtfully positioned across account types, you preserve more wealth over time.
Assets in traditional IRAs and 401(k)s benefit from tax-deferred growth. Investment gains, dividends, and interest compound without annual taxation. This deferral is particularly valuable for tax-inefficient investments like bonds, REITs, or actively managed funds that generate substantial taxable distributions.
Roth IRA and Roth 401(k) balances can be withdrawn in retirement tax-free—powerful when many retirees face higher-than-expected tax rates from required minimum distributions and investment income. Tax-free withdrawals allow you to manage taxable income strategically, potentially staying in lower tax brackets and reducing Medicare premium surcharges.
Contributing to traditional IRAs, 401(k)s, and HSAs reduces current taxable income, particularly valuable for high earners in elevated tax brackets. These deductions provide immediate tax savings that can be reinvested, effectively giving you more capital to grow.
Beyond individual account benefits, coordinating across accounts helps you manage taxable income more effectively: timing Roth conversions during lower-income years, positioning income-producing investments in tax-deferred accounts, using qualified charitable distributions from IRAs to satisfy required minimum distributions, and structuring withdrawals to optimize tax brackets.
Asset Location Strategy: We determine which investments belong in which accounts, placing tax-inefficient investments in tax-advantaged accounts, positioning high-growth stocks in Roth accounts, holding tax-efficient investments in taxable accounts, and coordinating across accounts to achieve your target allocation while optimizing tax treatment.
Tax-Aware Rebalancing: We preferentially rebalance within tax-advantaged accounts where transactions don’t trigger capital gains, use new contributions to restore balance rather than selling appreciated positions, and time sales in taxable accounts to manage tax implications.
Tax Loss Harvesting: We identify investments trading below purchase price and strategically sell them to realize losses that offset capital gains or reduce ordinary income, then reinvest in similar securities to maintain your allocation.
Customized Account Strategy: We evaluate whether to prioritize traditional deductible contributions or Roth contributions, determine optimal contribution levels across account types, plan Roth conversion strategies during opportune windows, and structure your complete account picture to minimize lifetime taxes.
Our team holds credentials including the CERTIFIED FINANCIAL PLANNER™ designation and has over 40 years of combined experience helping clients navigate complex tax situations, coordinate sophisticated account structures, and develop strategies that minimize lifetime tax liability while building wealth effectively.
NOTE
Securities through Valmark Securities, Inc., member FINRA, SIPC. Investment Advisory services are offered through BPM Wealth Advisors, LLC and/or Valmark Advisers, Inc. a SEC Registered Investment Advisor, with address of 130 Springside Drive, Suite 300 Akron, Ohio 44333-2431, and telephone number +1 (800) 765-5201. BPM LLP and BPM Wealth Advisors, LLC are entities separate from Valmark Securities, Inc. and Valmark Advisers, Inc. Form CRS Link
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