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Great Hill Advisory Case Study

During our years of service we have run across many situations where having a full understanding of our clients financial situation has allowed us to give them advice that has paid for our services many years over.  Here's a quick example.

Case Study: Tax Bonanza 

There are many instances we encounter where proper tax planning could have saved tens of thousands, if not hundreds of thousands of dollars, but this particular case shows where a little advice can be very valuable.

We had a recently retired corporate executive that approached us for retirement advice and investment coordination.  He has worked at his company for more than 15 years, accumulated a lot of company stock in various forms and wanted advice to reduce his exposure and minimize taxes.  After a lot of discussion on his long term goals and forecasting we recommended the following:

Recommendations for his 401k:

  • Distribute the low basis stock in his 401k and only pay taxes on the cost basis following the Net Unrealized Appreciation (NUA rules).

  • Convert a portion of his 401k to Roth IRA, paying taxes this year

Recommendations for low-basis stock owned for many years:

  • Gifts shares of the low basis stock to his children - This allowed it to be sold at the children's tax rate (And was later indirectly used to fund their 401k's).

  • Donate shares to a donor advised fund, significantly reducing his the taxes due on the NUA and Roth conversion above.

Recommendations for asset allocation

  • Under weight investments in his company's sector and asset class

  • Hold one year of spending as a cash reserve

In all we saved this client more than $300,000 in taxes with good planning.  We estimate that this will cover his financial planning advice for the next 15 years.

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