Blog

Be Prepared for the Future. Subscribe to RSWA newsletter.

Thank you for subscribing!

Six Good Things Investors Can Do When Stock Markets Are Bad

It is always an unsettling time for investors when the markets have a big drop.  Many want to do something or really, anything, just because it feels better to be acting as opposed to doing nothing.  Unfortunately, many times the emotionally fueled actions are counterproductive.  So, if you want to do "something," look at the following actions that may actually do some good in the long run.

1. Use Tax-Loss Harvesting

If some of your stocks or investments in taxable accounts are trading below where you bought them you can sell them and realize losses.  These losses can be applied to offset any realized gains.  If you have more losses than gains in any given tax year, you can use up to $3,000 of those losses to offset your ordinary income. Any additional losses can be carried forward to use in future years.  This is called making lemonade out of lemons…

Read More

Roth IRAs: 8 Essential Rules and Strategies to Know

Roth IRAs can be an excellent retirement savings vehicle for many people. They offer the ability to save for retirement with after-tax dollars, accumulate tax-free earnings, and withdraw money tax-free down the road. In simple terms, you trade a potential tax break today for tax-free withdrawals later. 

Read More

7 High Income Year-End Tax Planning Strategies for 2019

This post was updated on October 15, 2019 to reflect current tax information.

At year-end, many professionals and executives will have the opportunity to make some financial decisions that can have a big impact.  Many of these decisions will have tax implications.  Here is a look at a few of these issues and seven strategies that can help. 

The strategies covered in this article: 

  1. Tax Loss Harvesting
  2. Exercising Options
  3. How to Handle Restricted Stock
  4. Tax Bracket Management
  5. Donating Appreciated Securities
  6. Bunching Charitable Donations and Using a Donor-Advised Fund
  7. College 529 Contributions & Gifting

Read More

Company Stock in a 401k?  Consider Net Unrealized Appreciation (NUA)

When leaving a job for whatever reason, one of the biggest decisions you will face is what to do with your 401(k).  If your plan includes shares of your company's stock, NUA is something to consider during this process.

The Basics of NUA:

  • Net Unrealized Appreciation (NUA) can provide a significant tax break for those holding low-basis employer stock in their retirement plan.
  • There are strict rules that must be followed to take advantage of the NUA option.
  • NUA can provide an additional level of planning flexibility.

Read More

Using an Exchange Fund to Diversify Concentrated Stock Risk

What is an exchange fund?

Exchange Funds or “Swap Funds,” are private placement limited partnerships or LLCs.  An Exchange Fund allows an investor to “exchange” an individual stock for shares in a fund of many pooled stocks. Here are some of the key benefits and drawbacks to an exchange fund:

Benefits:
  • Provide immediate diversification
  • Allow a larger investment amount to grow (stock owner avoids selling stock, paying taxes, and reinvesting lesser amount in diversified investments)
  • Potential increase in value if the Exchange Fund outperforms the original stock
  • May accept contributions for restricted securities

Read More

Using an IRA QCD: Consider Giving Your IRA RMD to Charity

This post was originally published in February 2018 and has been updated to reflect 2019 tax law changes.

If you have reached 70.5 in age and have an IRA, you may benefit from donating all or a portion of your IRA required minimum distribution (RMD) to charity. By making a qualified charitable distribution (QCD), you may avoid tax on your RMD to the extent of the QCD.

Read More

Tax Reform Highlights. What You Need to Know.

Voting along party lines, Congress has passed, and President Trump has now signed major tax legislation (“The Tax Cuts and Jobs Act” or “Act”). At an estimated cost of $1.5 trillion dollars, the legislation delivers deep and permanent tax cuts for corporations, as well as reductions to individual taxes.

Read More

7 Strategies for Dealing With Your Concentrated Stock Position

This article was updated on April 10, 2019 to reflect current tax laws and limits.

There’s an old investment saying, “Concentrated wealth makes people wealthy, but diversified wealth keeps them wealthy.” One of the most common concentrations of wealth people have are large or concentrated stock holdings in a single company. Publicly traded companies often compensate employees with stock or stock options, especially upper-level executives. Others may have large holdings from investing early in an initial public offering (IPO) or inheriting a large holding. No matter how it was obtained, owning a large stock position creates investment and planning challenges.

Read More

Tax Reform: Process, Policy and Personalities

In late September, the White House and Republican congressional leaders published their guiding principles for reforming the U.S. tax code. This “Unified Framework” provides general direction but is silent on many details. The debate over how to re-size and re-divide the national tax pie has begun.

Read More

Charitable Giving Made Easy with Donor-Advised Funds

This article was originally posted in September 2017 and has been updated to reflect new data and the Tax Cuts and Jobs Act of 2017.

What is a Donor-Advised Fund?

Donor-advised funds (DAFs) go by many names.  They are called charitable gift funds, charitable funds, giving funds plus others.  For this article, I will refer to them by their legal definition, Donor-Advised Funds (DAFs).  A DAF is a fund maintained and operated by a sponsoring charitable organization which has legal control over the funds.

How Does a DAF Work?

  1. An individual, or donor, contributes cash or securities to a DAF account. Stocks and bonds are commonly used for funding.  Some DAFs may accept real estate, restricted stock, and non-publicly traded securities as well.  A minimum contribution is required and many of the larger DAF sponsors require minimums between $5,000 - $25,000. 

Read More