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.

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Case Study: Tax Bonanza 

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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.

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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:

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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

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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.

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Recommendations for asset allocation

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

• Hold one year of spending as a cash reserve

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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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