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There ARE Solutions for Required Minimum Distributions! 11.15.2021

By: Steve Pitchford, Director of Tax and Financial Planning      

Dreading a Required Minimum Distribution, or RMD, from a retirement account? No doubt, it’s because of T-A-X-E-S.

While RMDs can be an unwanted by-product of contributing to and investing in retirement accounts such as 401(k)s, IRAs, 403(b)s, etc., there are impactful and proactive tax planning strategies that can materially lessen the tax sting of an RMD.

What are RMDs, and how should an individual plan for them within the context of a tax-efficient retirement strategy? Read on to learn more about RMDs, and specifically, three actionable RMD strategies worth evaluating to better keep Uncle Sam at bay.

Required Minimum Distributions RMD taxes

What is an RMD?

The Internal Revenue Service (IRS) requires that individuals begin taking annual distributions (read: withdrawals) from pre-tax qualified retirement accounts[1] when they reach age 72. These withdrawals are referred to as required minimum distributions (RMDs).

RMDs from pre-tax qualified retirement accounts are subject to ordinary income tax rates in the year in which they are taken.

Examples of pre-tax qualified retirement accounts include:

  • Regular/Traditional IRAs
  • SEP IRAs
  • SIMPLE IRAs
  • 401(k) plans[2]
  • 403(b) plans
  • 457(b) plans
  • Profit sharing plans
  • Other defined contributions plans  
  • Inherited IRAs (subject to special rules, see page six)
  • Annuities, but only when held within another qualified retirement plan

Generally, Roth IRAs are the only type of qualified retirement plan not subject to RMDs. Withdrawals from Roth IRAs are tax-free, and the IRS does not mandate distributions from these accounts, as no tax revenue is generated when taking a Roth distribution.

Why are Investors Subject to RMDs?

Pre-tax contributions to a qualified retirement account provide two important and major tax advantages:

  1. A dollar-for-dollar reduction in taxable income (read: an income tax deduction) for the contribution in the year it was made
  2. Investment earnings (interest, dividends, and capital gains) are not taxed until withdrawn from the plan[3]. The power of tax-deferred compounding is tremendous, FYI:
The Power of Tax Deferral RMD taxes

If RMDs did not exist and an individual had sufficient supplemental financial means[4] to meet their retirement spending goals and objectives, they would probably avoid distributions from a pre-tax qualified retirement plan in the interests of avoiding paying the concurrent ordinary income taxes on those distributions. Requiring these distributions ensures that the government will not lose out on valuable tax revenue, on top of the lost tax revenue from the upfront tax deduction and tax-deferred growth that retirement accounts already provide.

How are RMDs Calculated?

For most individuals, the annual RMD calculation is as follows:

  1. The individual determines the account balance as of December 31 of the year before the RMD is to be taken.[5]
  2. The account owner determines his or her “life expectancy factor” using the life expectancy tables published by the IRS.
  3. The account balance is divided by the life expectancy factor to determine that year’s RMD.

The life expectancy table used for most individuals is the following:

Required Minimum Distributions How are RMDs Calculated

*Individuals should speak with their financial advisor or tax professional to ensure that they are not subject to a different life expectancy factor, as exceptions to the above table do exist.

Investment custodians such as Charles Schwab, Fidelity, and Vanguard typically calculate RMDs on behalf of the retirement account owner. However, it is the responsibility of the owner to ensure the RMD is satisfied before year-end.[6]

Towerpoint Tip:

Withholding taxes directly from qualified retirement plan distributions is generally the most convenient way to pay the RMD taxes. However, using after-tax dollars instead to pay estimated tax payments to cover the RMD taxes may be a more tax-efficient approach.

What If an Investor Misses Taking Some or All of Their RMD?

If a retirement account owner who is subject to an RMD misses taking it by December 31, the penalty is steep: 50% of the RMD shortfall.

If this happens to occur, the individual should immediately:

  1. Take corrective action and distribute the shortfall from their qualified retirement account as quickly as possible.
  2. File a Tax Form 5329.
  3. Attach a letter to the Form 5329 explaining the steps taken to correct this and why it was missed in the first place. While there is no formal guidance from the IRS regarding an error that would qualify for the penalty to be waived, three common positions taken are a change in address resulting in not getting the RMD notification, a death in the family, or an illness.

How to Effectively Plan to Decrease RMD Taxes

There are three strategies that we regularly employ for our Towerpoint Wealth clients to mitigate RMD taxes.

Strategy One: Accelerate IRA Withdrawals

Subject to certain exceptions, age 59 ½ is the first year in which an individual is able to take a distribution from a qualified retirement plan without being subject to a 10% early withdrawal tax penalty.

Consequently, the window of time between age 59 ½ and age 72 becomes an important one for proactive RMD tax planning. By strategically taking distributions from pre-tax qualified retirement accounts between these ages, an individual may be able to lessen theiroverall lifetime tax liability by reducing future RMDs (and the risk that RMDs may push them into a higher tax bracket) by reducing the retirement account balance.

This strategy becomes particularly opportune for an individual who has retired before age 72, as it often affords the individual the ability to take these taxable distributions in a uniquely low income (and lower income tax) period of time.

At Towerpoint Wealth, we utilize BNA Income Tax Planner, a robust piece of tax planning software, to evaluate these types of tax planning opportunities, helping our clients optimize this decision-making process.

Towerpoint Tip:

Don’t forget Social Security! Leveraging distributions taken from qualified retirement accounts to serve as a retirement income “bridge” is an important consideration when strategically planning how and when to receive Social Security benefits. Oftentimes, it is advisable to take distributions from qualified retirement accounts to meet retirement spending goals and objectives and delay filing for Social Security benefits until age 68, 69, or even 70.

Why? Each year Social Security benefits are deferred, starting at the first eligible filing year of age 62, until age 70, the monthly benefit amount increases by a guaranteed 8%! 

Strategy Two: Execute a Roth Conversion

A Roth conversion is a retirement and tax planning strategy whereby an individual transfers, or “converts,” some or all of their pre-tax qualified retirement plan assets from a Traditional IRA into a tax-free Roth IRA.

While ordinary income taxes are owed on any amounts of tax-deferred contributions and earnings that are converted, a Roth conversion, when utilized properly, is a powerful tax planning strategy to reduce a future IRA RMD, as Roth assets are not subject to RMDs. Further, Roth conversions 1) maximize the tax-free growth within a taxpayer’s investment portfolio, 2) provide a hedge against possible future tax-rate increases (as Roth retirement accounts are tax-free), and 3) leave a greater tax-free financial legacy to heirs.

Roth IRAs IRA RMD

For both strategies #1 and #2: Consider executing these strategies for the older spouse first, as this individual will be subject to an IRA RMD earlier. For this same reason, it is often advisable to contribute to the younger spouse’s pre-tax qualified retirement plan first.

Towerpoint Tip:

At Towerpoint Wealth, pairing a Roth conversion with the “frontloading” of a Donor-Advised Fund (DAF) has been a powerful tax planning strategy, allowing our clients to convert additional assets “over” to tax-free Roth assets at lower tax rates, while also allowing taxpayers who would not ordinarily itemize deductions to “hurdle” the standard deduction. This ensures that they receive at least a partial tax deduction for their charitable contribution to a DAF.

Strategy Three: Use the IRA RMD to Make Qualified Charitable Distributions

When an individual becomes subject to an IRA RMD, in lieu of having the IRA distributions go to them, they may consider facilitating a direct transfer from their IRA to one, or more, 501(c)3 charitable organizations (up to $100K annually). This is known as a Qualified Charitable Distribution (QCD).

As long as these distributions are made directly to the charity, they 1) satisfy the RMD and 2) are excluded from taxable income.

This strategy, when executed property, results in a dollar-for-dollar income reduction compared to a “normal” RMD.

Required Minimum Distributions Charitable Distributions

What Is an Inherited IRA, and Are They Subject to RMDs?

An Inherited IRA, also commonly known as a Beneficiary IRA, is a qualified retirement account that is opened on behalf of the beneficiary(ies) of the original owner’s qualified retirement account after the death of this owner. While the rules surrounding RMDs for Inherited IRAs can be complicated, Inherited IRAs are subject to mandatory distribution schedules.

For most individuals, the RMD on Inherited IRAs is levied as follows:

            RMD on Inherited IRA for an owner who passed before December 31, 2019

Subject to a life expectancy table similar to those for regular RMDs. These RMDs begin the year following the death of the owner.

            RMD on Inherited IRA for an owner who passed after December 31, 2019

Subject to the “10-Year Rule” where all funds need to be distributed ten years after the year of the owner’s death. How and when funds are distributed within this ten-year time horizon is up to the owner of the Inherited IRA.

Towerpoint Tip:

The “10-Year Rule” is making Inherited IRA tax planning more important than ever. Although the flexibility of how and when to withdraw funds within this period may be helpful, the window of distribution is more compressed (for most individuals) compared to the “old” rules.

Individuals should consider a Roth conversion if they are concerned about their inheritors paying taxes on future distributions. While Inherited Roth IRAs are subject to the same RMD rules as Inherited IRAs, the distributions are tax-free. A Roth conversion, within this context, is an estate planning strategy to transfer tax liability to the original account owner and away from the future inheritor(s).

How Can We Help?

At Towerpoint Wealth, we are a fiduciary to you, and embrace the legal obligation we have to work 100% in your best interests. We are here to serve you and will work with you to formulate a comprehensive and tax-efficient retirement strategy. If you would like to discuss further, we encourage you to call, 916-405-9166, or email spitchford@towerpointwealth.com to open an objective dialogue.

CLICK Here To Download Towerpoint Wealth PDFs

[1] A retirement plan that provides tax advantages relative to nonqualified plans. Most employer-sponsored plans are qualified retirement plans.

[2] Less than 5% owners can defer RMDs until they leave the company or retire.

[3] Taxable investment accounts, such as a brokerage account or trust account, are subject to taxes based on annual earnings. Investors receive a Form 1099 each year showing the income to be reported on tax returns.

[4] Pension income, Social Security benefits, taxable investment assets, etc.

[5] For example, a 2021 RMD is calculated using the account balance as of December 31, 2020.

[6] RMDs may be taken all at once or throughout the year.

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Will the Beginning of Fall Cause the Market to Stall? 09.17.2021

In the Northern Hemisphere, September (the harvest month) marks the beginning of meteorological autumn, and in many countries, the beginning of the academic year.

ira required minimum distribution

In her short poem about the month of September, the Canadian author Lucy Maud Montgomery (best known for her classic children’s novel, Anne of Green Gables) offers a cheerful tribute to the ‘late delight’ of the month:

Lo! a ripe sheaf of many golden days

Gleaned by the year in autumn’s harvest ways

With here and there, blood-tinted as an ember,

Some crimson poppy of a late delight

Atoning in its splendor for the flight

Of summer blooms and joys

This is September

She could be saluting 2021’s cheerfully buoyant year-to-date stock market returns, with the S&P 500 up +20.35% as of Thursday, September 16th.

However, September has historically been a volatile month for stocks, and in the past has ranked as the least promising month of the year, on average, for the S&P 500 index over the 1928-2021 time frame:

ira required minimum distribution table 2021

Additionally, through September 1st of this year and as depicted by the chart below, the S&P 500 has reached a total of 53 (!) new record closing highs, the fifth highest figure in the past 93 years:

ira required minimum distribution table 2021 Closing Highs

The $64,000 question: Is it reasonable to expect this growth and momentum continue? Here are both sides of the story:

Positive Economic Developments

  1. Improving jobs market: After a rolling sequence of shortages in 2021 (including lumber, used cars, ocean shipping capacity, and semiconductors), labor also continues to be in short supply for many companies. This is reflected in the Bureau of Labor Statistics (BLS) report of an increase to 10.1 million job openings (!) as of the last business day in June, the highest EVER figure since job openings began to be tracked in December of 2000.
  2. “Goldilocks” labor recovery: While the labor market is improving, it does not appear to be improving at such a rapid extent that the Federal Reserve feels compelled to becomes more aggressive in reducing (or “tapering”) its current level of asset purchases (currently $120 million per month)
  3. Services and manufacturing sector expansion: On September 3rd, the Institute for Supply Management (ISM) reported its services index grew for a 15th consecutive month, registering a 61.7 in August after a hitting a record high of 64.1 in July. On September 1, the ISM reported its manufacturing index also grew for 15 consecutive months, with a very good reading of 59.9.
  4. Rising home prices: Spurred by extremely low interest rates, an increased ability to work remotely, and low inventories of homes for sale, the median sales price for single-family existing homes was higher year-over-year in 2Q, 2021 for 182 of the 183 metropolitan areas tracked by the National Association of Realtors (NAR). In fact, in 94% of those metropolitan areas, median prices rose by *more than* 10% from a year earlier!
  5. Potential for scaled back tax increases: In a September 2 Wall Street Journal op-edWest Virginia Senator Joe Manchin indicated that he would not support a social infrastructure spending bill anywhere near $3.5 trillion, thus reducing the chances that such a large package would become law and lead to significantly higher taxes
  6. Significant individual and institutional investor liquidity: The Investment Company Institute (ICI) reports that as of 9/15, total assets of retail money market funds amounted to $1.43 trillion (!), and total assets of institutional money market funds reached $3.03 trillion. This almost $4.5 trillion of CASH currently sitting on the sidelines represents significant buying power for financial assets
  7. Significant corporate liquidityAccording to Dow Jones Market Data, cash holdings among S&P 500 companies reached $1.98 trillion on August 9, a more than 30% increase from two years ago at the end of 3Q, 2019 When combined with significant available credit that remains unused, S&P estimates a total of $6.8 trillion of unused cash liquidity is available to the corporate sector as a whole. This liquidity can be used to buy back stock, increase dividends, and pursue strategic capital investments

Please bear in mind, while this is an impressive and robust list, there are also risks and concerns to worry about: Uninspiring retail sales, weakening commodity prices, slower 3rd quarter GDP growth estimates, and declining consumer confidence, to name a few.

However, at Towerpoint Wealth, we believe the most concerning potential headwind comes in the form of high stock valuations, as the S&P 500’s forward price-earnings (P/E) ratio of 21.2x is the highest it has been in two decades!

High Stock Valuations Price Earning Ratio

Although stretched valuations generally do not represent a causal trigger for a stock market correction, at elevated levels (as is presently), they nevertheless can serve investors well as a cautionary warning sign.


While we will always remain humble about our ability to consistently predict the future with accuracy, we do advise clients and friends to heed these high valuations, and to be vigilant in biasing high-quality, “all-weather” assets in their portfolios, especially in light of complacent stock market volatility readings and the long span of time without so much as a 5% market correction.

Confused? Worried? In need of discipline, direction, and/or a plan? Have questions or concerns? Click HERE to contact us for an objective, no-strings-attached conversation about you and your circumstances, as we fully support and echo Warren Buffet’s philosophy:

Warren Buffet Philosophy

What’s Happening at TPW?

Our Partner, Wealth Advisor, Jonathan LaTurner, wrapped up an amazing trip to Washington D.C. with his fiancée, Katie McDonald, stopping by 1600 Pennsylvania Avenue and also the Smithsonian’s National Museum of Natural History.

Looks like an awesome tour of our nation’s capital, Jon!

The San Francisco Giants are hot right now (!), and our Director of Tax and Financial Planning, Steve Pitchford, and his partner, Katie, took in an AMAZING extra-innings Giants ‘W’ versus the Dodgers two Fridays ago at Oracle Park! #BeatLA

Illustrations/Graphs of the Week

You cannot keep funds in a retirement account indefinitely, as the government wants their share! Required minimum distributions (RMDs) represent the minimum amount that you must withdraw from your IRA or employer-sponsored retirement plan account each year. With the exception of Roth IRAs and Roth 401(k)s, from which withdrawals occur tax-free and are not required until after the death of the owner, regular RMDs can be a “tax thorn” in the side of many investors who have accumulated wealth in any tax-deferred retirement account.

In addition to the two resources found in the news stories at the bottom of this newsletter (discussing RMDs and QCDs), the table directly below, courtesy of Michael Kitces from Kitces.com, does an excellent job of outlining the various strategies available to reduce, minimize, and delay these pesky mandatory, and taxable, retirement account withdrawals:

retirement account withdrawals

Confused? Have questions or concerns? Click HERE to contact us for an objective, no-strings-attached conversation about you and your retirement account circumstances.


Trending Today

As the 24/7 news cycle churns, twists, and turns, there have been a number of trending and notable events that have occurred over the past few weeks:

As always, we sincerely value our relationships and partnerships with each of you, as well as your trust and confidence in us here at Towerpoint Wealth. We encourage you to reach out to us at any time (916-405-9140, info@towerpointwealth.com) with any questions, concerns, or needs you may have. The world continues to be an extremely unsettled and complicated place, and we are here to help you properly plan for and make sense of it.

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– Joseph, Jonathan, Steve, Lori, Nathan, and Michelle

Towerpoint Wealth team - Sacramento financial planner
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Questions to Ask if Building Wealth is the Task 05.28.2021

As we sit on the eve of 2021’s Memorial Day Weekend, 73% of those in a Quinnipiac poll said their plans are similar to the ones they had pre-pandemic. The light at the end of the pandemic tunnel is getting brighter and brighter by the day!

building Wealth Questions to Ask

We’re looking at plunging COVID-19 case and death rates and widening vaccination uptake rates here in the United States, in addition to an uptake in exuberance and economic optimism by investors that has driven the stock market to all time highs. And, as is typically true during periods of market extremes, the talking heads, market strategists, investment gurus, and even your brother-in-law Frank seem to have all the answers as to why this is happening, and what lies around the corner. Our advice to you: Ignore this nonsense, and ignore them all.

Rather than become enamored by these predictions and/or fall prey to a well-articulated story spun by a seemingly well-credentialed “expert,” we encourage you to tune out this noise, and not worry nor think too much or too hard about interest rates, cryptocurrencies, inflation, China, large caps and small caps, mask mandates, or the U.S. deficit. Don’t worry about what the “new normal” means, and don’t get too worked up about “getting your share” of the possible American Jobs Plan or the American Families Plan stimulus packages (we’re purposefully not even linking to any of these themes). Instead, let’s channel our energy and attention into things that we have control over.


While we do believe you should always be ready for the unexpected, we also feel it is way more important to understand and internalize a number of foundational investing and wealth building principles. Ask yourself if you can succinctly and confidently answer the following questions:

  • Can I remain objective and rational, and recognize when you are being fearful, greedy, and emotional about your money? Your worst investment enemy is usually found by looking in the mirror. The limbic system is a wonderfully complex set of brain structures that deal with emotions, but activating your fight or flight response in reaction to fear, greed, and anger is not conducive to successful investing or successful longer-term wealth building. 
  • Do I understand that my neighbors, friends, and co-workers are perhaps confused and delusional? Not only do they probably spend too much and boast too much about their portfolio, but the chances their financial decisions are rooted in any of the principles listed here are quite low.
  • Am I trying to simply make money, or am I working to build and protect my wealth? We equate the former to gambling, and the latter to investing. While anything can happen on a daily, weekly, monthly, and even annual basis, we believe your odds of success increase significantly if you establish and follow a disciplined longer-term wealth building plan.
  • What am I doing to proactively insulate my downside from a major catastrophe during a market correction? We believe this is way more important than hitting a home run during a period of market strength. While his two rules are a bit binary, the spirit of Warren Buffett’s quote should resonate:
  • Why am I investing, and do I have a plan? For obvious reasons, it is invaluable to not only think through, articulate, and quantify the goals and vision you have for your and your family’s future, but also to have a methodology for how you attend to your personal financial decision-making. And this methodology will be different than your friend’s, neighbor’s, or co-worker’s, as we all obviously have different things that motivate us and that we ultimately want out of life. This is assuming that your friend, neighbor, or co-worker even has a plan at all.
  • Do I recognize that costs, fees, expenses, and taxes matter? At Towerpoint Wealth, we call them “necessary evils” to helping clients grow and protect their net worth. And while we can never eliminate the drag that costs, fees, expenses, and taxes creates, we certainly can work to identify, and reduce, these friction points.
  • Am I aware that saving money is the single most effective way to build my wealth and to retire? While you need to have balance between saving for tomorrow and living your life today, the capital you spend today is capital no longer available to fund your retirement. Saving money equals peace of mind.

Towerpoint Wealth Turns Four!

On May 26, 2017, with zero clients and $0 in assets under management, we officially launched Towerpoint Wealth. Classified as a “bold,” “risky,” “fearless,” and “courageous” decision by our clients and colleagues, it fortunately turned out to be a prescient and extremely positive one based on the feedback we continue to receive and strategic growth we continue to experience.

Today, we are approaching $350 million in assets under management, and continue to be thrilled to serve YOU, always striving to expand your peace of mind by helping you remove the hassle of properly coordinating your financial affairs.

What’s Happening at TPW?

The Towerpoint Wealth crew recently spent some time in a professional photo shoot with Tim Engle, of Tim Engle Photography – below is one of our favorite shots from the session.

We hold our collective noses to the grindstone at Towerpoint Wealth ~ 97% of the time. However, the culture we have built at the firm is also predicated on spending time outside the office and having fun together as a work family, which is why we regularly schedule fun teambuilding events.

We had an enjoyable “hooky afternoon” earlier this month, pedaling through midtown Sacramento on the Sacramento Brew Bike, with pit stops at Public House DowntownKupros, and The Golden Bear. A well-behaved and fun afternoon!

TPW Service Highlight – RETIREMENT – Building wealth

We only semi-jokingly say that you can retire any time you want, but will you be able to with the lifestyle and income stream you desire?

At Towerpoint Wealth, we believe that everyone deserves a secure retirement, and we stand ready to help you with a myriad of retirement-specific tools and planning considerations. The cornerstone of this process is the development of a customized retirement and financial plan using our modeling software from RightCapital(R).

Click HERE to review a sample customized RightCapital financial plan.

Additional retirement-specific services include sustainable and tax-efficient retirement income planning, “black swan” event planning and modeling, customized Social Security benefit election optimization analysis, corporate pension modeling and optimization, fixed/variable/immediate annuity analysis, and optimal-retirement-age projections.

Chart of the Week

Real estate values continue to be on fire! Click HERE to watch an excellent video in which our President, Joseph Eschleman discusses the white hot Sacramento real estate market with long-time Sacramento realtor, Brian Kassis.

And while there is no question about the tremendous price increases homeowners have experienced over the past year and a half, the chart below makes an interesting comparison between the value of the stock market (using the S&P 500 as a proxy) and the value of residential real estate (using the Case Shiller U.S. National Home Price Index as a proxy) over the past 30 years.

Understanding the importance of owning both real estate AND equities when working to build net worth, and recognizing that people seem to be more relational to the increases in the value of their home, the chart below from Visual Capitalist is an eye-opener!

In addition to home prices going up and U.S. COVID numbers going down, a number of trending and notable events have occurred over the past few weeks:

As always, we sincerely value our relationships and partnerships with each of you, as well as your trust and confidence in us here at Towerpoint Wealth. We encourage you to reach out to us at any time (916-405-9140, info@towerpointwealth.com) with any questions, concerns, or needs you may have. The world continues to be an extremely unsettled and complicated place, and we are here to help you properly plan for and make sense of it.

– Joseph, Jonathan, Steve, Lori, Nathan, and Michelle

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Is There a Vax to Protect Your Portfolio From Tax?

2016 survey of 1,000 taxpayers, conducted by WalletHub, found that, if told they never had to pay income taxes again, 27% of respondents would brand themselves with a tattoo that says “IRS” and 11% would gladly drive to Chipotle every single day for three years to clean its toilets. You can’t make this stuff up!

And while there is credible evidence and research that suggests people actually like paying taxes (click HERE to read a Psychology Today article about this “phenomenon”), in our 23+ years helping clients properly build and protect their net worth and wealth, we have yet to encounter a single client, prospect, colleague, or friend who fits this category. While we may intellectually understand why we have to pay them, most of us seem to emotionally detest it.

At Towerpoint Wealth, we recognize (and embrace!) our bias in working with and helping our clients towards achieving the goal of growing and building their assets as intelligently and as efficiently as possible. Understanding there are a myriad of road blocks, speed bumps, and hazards to account for while on this journey, we also recognize and coach our clients to understand that there are two major, and unfortunate, “necessary evils” that stand in the way of accomplishing this goal:

  • Fees, costs, and expenses
  • Taxes

And while neither of these is completely avoidable, intelligently reducing the drag of either one directly helps your portfolio get better gas mileage. Below are two simple examples to illustrate that point:

To be clear, we have encountered those who let the “tax tail wag the dog” and seemingly focus more on tax avoidance than net-worth building; our preference will always be to help our clients maximize their after-tax wealth, which does pair with having a tax bill every year. However, it also pairs with being directly mindful about keeping your obligation to Uncle Sam to an absolute minimum whenever and wherever possible.

The 2020 tax season is right around the corner, and with it will come some inevitable surprises for those who didn’t properly plan, or who were ignorant of certain aspects of and/or changes to their global 2020 income tax situation. And understanding the interest, dividends, and capital gains that will soon be showing up on your 1099 forms, (all of which report taxable income to the IRS), we encourage you to use the resources found at the bottom of this newsletter to your advantage, and to contact us (click HERE) if you encounter any unwanted 2020 “tax surprises,” or feel you would benefit from a fresh perspective on how to leverage and maximize ideas and opportunities to make your portfolio, and your life, more tax efficient.

What’s Happening at TPW?

Our Wealth Advisor, Matt Regan, working hard as usual from home right now, along with little Mason and Stevie, his loyal friend!

Directly reflecting the firm’s culture, Towerpoint Wealth is a family both inside and outside the office, as our Partner, Wealth Advisor, Jonathan LaTurner, our Client Service Specialist, Michelle Venezia, our President, Joseph Eschleman, and our Director of Tax and Financial Planning, Steve Pitchford all enjoyed a fun day hanging out together and watching Super Bowl LV!

TPW Service Highlight – Tax-Managed Portfolio Management

In addition to investment expenses, income taxes are the second of the two necessary evils we face when helping you grow, and protect, your net worth and assets in the most effective and efficient way. Taxes can severely impact investment returns if not monitored, scrutinized, and controlled. And while we never let the “tax tail wag the dog,” at Towerpoint Wealth we do maintain a specific focus on helping our clients absolutely minimize the tax impact of their investments, portfolio, and overall financial decision-making.

Utilizing low-turnover mutual funds, ETFs, and separately-managed accounts, taxable versus tax-free bonds, strategic tax-loss harvesting, tax diversification, and the asset location strategies discussed in Steve Pitchford’s MoneySavage podcast featured below helps us help our clients significantly reduce the income taxes they pay on their investments.

Issuance of 2020 Charles Schwab 1099s 

A brief but important reminder for our Towerpoint Wealth family of clients: Initial Form 1099 production is based on two different waves at Schwab, with the vast majority (85%+) produced in the second wave:

Chart of the Week

The population exodus from high-tax states like California, New York, and New Jersey is very real, as a migration to other, oftentimes lower-tax states happens when individuals do not feel they are getting enough value for the taxes they are paying.

Federal and state income taxes are unfortunately a necessary evil when working to grow and protect your net worth, but working to manage and minimize your “obligation” to the taxing authorities is one of Towerpoint Wealth’s core competencies. Click HERE to message us and learn more about specific strategies to *reduce* your income tax pain.

Trending Today

In addition to tax drag and Super Bowl schwag, a number of trending and notable events have occurred over the past few weeks:

As always, we sincerely value our relationships and partnerships with you, as well as your trust and confidence in us here at Towerpoint Wealth. We encourage you to reach out to us at any time (916-405-9140, info@towerpointwealth.com) with any questions, concerns, or needs you may have. The world continues to be an extremely complicated place, and we are here to help you properly plan for and make sense of it.

– Joseph, Jonathan, Steve, Lori, Nathan, Matt, and Michelle

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