Financial Planning

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.
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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.
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You can sell stock and take the gains to redistribute in your portfolio without ever incurring a taxable event.
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You are subject to tax on any amount withdrawn, at your tax rate, after age 59 ½.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.