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Tax Mitigation Strategies

The greatest erosion of wealth is taxes.

At Frontier, we plan each client’s investment strategy with three tax-buckets in mind:

Taxable

Accounts that have the potential to grow and or earn dividends from stocks, bonds, mutual funds, ETFs, CDs, and other alternative investments.

Tax-deferred

Retirement accounts and annuities.

 

This is a great way to grow retirement wealth. 

Tax-free

There are individual investments and accounts which can create tax-free income.

Taxable

 

Taxable accounts can also incur capital gains or losses, which will be taxed in the year earned if it’s a mutual fund.

 

If you have capital gains in stocks, you can determine when to take these.

 

  • If you have any losses in your account, these can be harvested at year-end to help with tax mitigation.

Tax-Deferred

 

All dividends and interest earned in your retirement and annuity accounts are never taxed.

 

  • You can sell stock and take the gains to redistribute in your portfolio without ever incurring a taxable event.

  • You are subject to tax on any amount withdrawn, at your tax rate, after age 59 ½. There is a 10% penalty if you make withdrawals before this age.

Tax-Free

 

There are individual investments and accounts which can create tax-free income.
ROTH IRAs can grow from initial contributions with dividends, interest, and capital gains. The selling of any assets will not trigger a taxable event. Capital withdrawals of initial contributions after an establishment of the Roth IRA after 5 years can be made. Anything above this amount would incur a penalty if taken before age 59 ½. After this age, all withdrawals are 100% tax free.

There are individual state municipal bonds in which the interest is considered tax-free income in the state for which the bond was created.