Tax Efficiency: Helping to Optimize Your Assets with Holistiplan
As Benjamin Franklin famously noted, nothing can be said to be certain except death and taxes. While we can only address one of these certainties today, looking at taxation through a wider lens may help inform your financial decisions.
At IntentGen Financial Partners, we consider tax efficiency part of a holistic approach to financial planning—not just focusing on the taxes you pay each April but understanding how taxation impacts your financial life over time.
Understanding Tax Efficiency
Tax efficiency involves considering how and when different types of assets are taxed. The Tax Efficiency checklist we utilize at IntentGen helps categorize assets into three distinct groups:
Tax Now assets are typically liquid and positioned for current, short-term needs. These include:
- Checking and savings accounts
- Certificates of deposit
- Mutual funds in taxable accounts
- Stocks (dividends) in taxable accounts
- Bonds in taxable accounts
Tax Later assets are generally earmarked for longer-term needs like education funding and retirement. These include:
- Traditional IRAs
- 401(k) plans
- 403(b) and other retirement accounts
- Variable annuities
- Fixed annuities
- Stocks (capital gains) in taxable accounts
Tax Never assets may offer preferential income-tax treatment on accumulated value and distributions. These include:
- Roth IRAs
- Roth 401(k) plans
- Municipal bonds
- Life insurance cash value
- 529 College Savings Plans
- Health Savings Accounts (HSAs)
Understanding these categories may help you position assets more effectively based on your circumstances and goals.
The Value of Diversification
Beyond simply categorizing assets, we believe tax efficiency involves three types of diversification:
Time diversification considers your life on a timeline with various short- and long-term goals—perhaps a new home, college education for children, retirement, travel, or charitable giving. How and when you plan to use your money may influence the tax-efficient investments that align with your objectives.
Investment diversification involves allocating investments across various asset classes. While diversification alone cannot protect against losses in a declining market, it may serve as an approach to managing risk and addressing inflation concerns.
Income tax diversification focuses on positioning assets to potentially increase your total spendable income.
Holistiplan: Technology for Tax Planning
At IntentGen, we utilize Holistiplan software as part of our financial planning process. This technology allows our advisors to review tax returns and identify potential planning opportunities that align with your financial circumstances.
Holistiplan enables our team to analyze various aspects of your tax situation, including:
- Recognition of capital gains
- Pre-tax versus Roth contributions
- Interest deferral options
- Medicare and marginal tax bracket considerations
- Health savings plan contributions
- Education funding strategies
- Retirement account distributions
The IntentGen Approach: Beyond Annual Tax Filing
At IntentGen Financial Partners, we believe tax planning should be an integral component of your comprehensive financial strategy, not a once-a-year exercise. Our approach integrates tax considerations into every aspect of financial planning—from retirement and education funding to investment management and estate planning.
When you work with our team, we typically begin with a thorough analysis of your current tax positioning using our detailed Tax Efficiency checklist. This assessment helps identify which assets may be optimally positioned from a tax perspective and where adjustments might be beneficial. The checklist serves as both an educational framework and a practical tool for organizing financial resources.
We then leverage Holistiplan software to analyze tax returns and model scenarios specific to your situation. This technology-enhanced review can uncover opportunities that might otherwise be overlooked, such as:
- Strategic asset location across different account types
- Potential Roth conversion opportunities
- Tax-efficient withdrawal sequencing for retirement income
- Coordination of investment choices with your tax situation
- Education funding approaches that balance tax efficiency with other goals
What distinguishes our approach is the integration of tax considerations with your broader financial objectives and values. Rather than viewing tax planning in isolation, we evaluate how tax decisions can affect—and can be affected by—your comprehensive financial picture.
To learn more about our Tax Efficiency checklist or to schedule a consultation, contact IntentGen Financial Partners at (630) 821-6990 or visit www.intentgen.com.
This Report does not provide legal, tax, or accounting advice. Before making decisions with legal, tax, or accounting ramifications, you should consult appropriate professionals for advice that is specific to your situation. Advisors are not licensed attorneys, and legal advice is not part of any engagement for financial planning or estate planning services.
Thrivent Advisor Network and its advisory persons do not provide legal advice, accounting or tax advice. The information provided is intended to be discussed and reviewed with your professional tax advisor. The information displayed is NOT intended nor designed to assist you in completing tax forms or provide tax advice. This material is intended to assist in considering hypothetical scenarios, which may impact federal income tax. It helps illustrate how different scenarios would have played out if filing had occurred under those circumstances in the prior tax filing year(s). This material is intended for education and is not designed for precision. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation.
The calculator uses the values provided by you and does not otherwise calculate certain credits, gains, losses, deductions, carry-over and alternative minimum taxes. Due to the complexities of certain provisions of the federal income tax law, not all situations can be computed with complete accuracy. Also note this material may consider state income taxes, and may calculate FICA taxes withheld for salary and wages (Social Security and Medicare). If any of the strategies discussed are implemented, actual federal income tax returns will differ from what is shown here. The firm providing you with this report does not provide tax or legal advice and all individuals are encouraged to seek the guidance of qualified tax professionals prior to making any decisions about their personal situation. Data and calculations used to produce this report are provided solely by Holistiplan, the accuracy and completeness of which have not been independently verified by the firm.
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