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:
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Distribute the low basis stock in his 401k and only pay taxes on the cost basis following the Net Unrealized Appreciation (NUA rules).
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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:
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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).
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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
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Under weight investments in his company's sector and asset class
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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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