Understanding the Value of Tax Management at Integrity Financial Planning

Investment taxes deserve attention, but a lower tax bill is not the only goal. The right approach also needs to fit your retirement income needs, investment costs and willingness to take risk.

After-Tax Returns

After-tax return is the return remaining after applicable taxes. "Tax alpha" is an estimate of the difference between an after-tax outcome with tax management and an assumed comparison without it; the comparison is not directly observable. Tax-loss harvesting, gains deferral and charitable gifts of appreciated securities may help in appropriate taxable-account situations, but their value depends on your holdings, tax circumstances, costs, market conditions and later realization of gains. There is no guaranteed annual tax benefit or return improvement. Harvesting does not provide the same tax benefit inside an IRA or other tax-deferred account.

The Taxes Saved Report

Clients who elect active tax management receive a Taxes Saved Report prepared by Altruist, our custodian. The report presents estimates for review, not a guarantee of savings. It includes:

• An estimated comparison against an assumed strategy without tax management, rather than proof of additional investment return or a prediction of future results.
• An estimate of the taxes saved or deferred through active tax management, and where those estimated savings came from.

Questions to discuss include which assumptions drive the estimate, how deferred gains may be taxed later, which costs are included, and how portfolio risk affects the comparison.

Estimated taxes saved or deferred are not a guarantee of permanent savings or improved investment performance. Deferring gains can change when taxes are paid rather than eliminate them, and estimates depend on assumptions. Review the report's methodology and limitations alongside the costs and risks of your portfolio.

Costs and scope

Active tax management is optional for taxable accounts. Altruist, our custodian, charges up to 0.10% per year on enrolled assets for its tax-management tool, separate from IFP's advisory fee; Integrity Financial Planning receives no part of it. See our complete fee schedule.

For clients with assets under management under $500,000, the Advisor reserves the right to charge an hourly fee for financial planning.

Review the sample estimated Taxes Saved report and Personal Index Portfolios. Schedule a free, no-obligation introductory meeting with Todd to discuss your priorities and whether the approach fits; the conversation is not a completed portfolio recommendation.

This content is developed from sources believed to be providing accurate information. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.