Proactive tax planning is crucial for high-net-worth individuals (HNWIs). Their financial situation may be incredibly complex, necessitating sophisticated tax strategies as they work toward specific tax planning outcomes. Here are seven tax planning tips intended specifically for HNWIs. Engage in year-round tax planning. HNWIS must understand the importance of proactive, year-round tax planning. Unlike taxpayers who may only focus on tax matters a few weeks before the filing deadline, HNWIs should engage in tax planning throughout the year. Year-round tax planning enables them to take advantage of tax-saving strategies that require foresight and planning. Implement asset allocation strategies. One tax planning strategy involves asset location. Asset location refers to the type of accounts in which investments are held – tax-deferred, tax-free, or taxable. HNWIs should evaluate the tax efficiency of their investments and consider placing less tax-efficient investments in tax-advantaged accounts. In contrast, investments considered more tax-efficient can occupy taxable accounts. This allocation strategy may lead to significant tax savings over time. Initiate investment tax planning. Investment tax planning is another critical consideration for HNWI. It aims to address after-tax investment returns by strategically managing taxable events such as capital gains and losses. For instance, long-term investments are taxed at a lower rate than short-term investments, so maintaining investments for at least one year before selling them may result in tax savings. Consider tax-loss harvesting. Also, a tax-loss harvesting strategy should be considered to help manage capital gains taxes by selling securities at a loss to offset capital gains in other portfolio holdings. While timing the market is not recommended, strategic selling during downturns can help manage one’s overall tax bill. Charitably give. HNWIs can also leverage their wealth to

The end of the year is not just a season for celebration and reflection but also a perfect time to ensure that our finances are in order. This includes crucial aspects such as wrapping up all financial contributions before the year-end for retirement savings plans such as Keogh, Solo 401(k), and 401(k) and making strategic decisions about selling stock to realize gains or losses. Here’s how to ‘wrap up’ contributions and tax-savings strategies promptly before the year-end IRS deadline of December 31st. Keogh Plan A Keogh plan, or HR 10, is a tax-deferred pension plan available to self-employed individuals or unincorporated businesses. With these specialized plans, the contribution limit is up to a specific limit or 100% of earned income, whichever is lower. The IRS determines the contribution limit each year, so it’s vital to consult with a financial or tax professional regarding this year’s limit. Remember, you must make your year-end contributions by December 31st. Solo 401(k) The solo 401(k) plan is another well-known retirement savings strategy for self-employed professionals. This plan allows one to contribute as an employee and employer, increasing the permissible IRS contribution limit. As a business owner, you can contribute up to this year’s IRS limit through tax-deferred contributions, plus additional contributions as an employer that are tax-deductible to the business. As the year draws to a close, be sure you’ve managed your contributions to take advantage of the tax savings on contributions you and the company receive. 401(k), 403(b), and 457 plans Managing your contributions is essential if you work in a job offering a traditional retirement savings plan such as 401(k), 403(b), or 457 plan. The total amount you can contribute each year

Creating an investment savings plan (ISP) is essential for keeping you on track toward your goals and building wealth. Whether you’re saving for retirement, a new home, or your children’s or grandchildren’s education, an ISP can help you grow your money over time as you work toward specific goals.   This comprehensive guide explains what an ISP is and how to create one that aligns with your financial objectives.   What is an ISP?   An ISP is a financial strategy that regularly sets aside money to invest in securities to help build wealth over time for specific goals. ISPs take advantage of compound interest and the market’s long-term growth potential. ISPs may change over time as you work toward goals. Part of this strategy is working with a financial professional to monitor investment performance and update your plan accordingly.   Here’s how to create an ISP:   Determine your goals and timeline.   The first step in creating an ISP is establishing clear and realistic financial goals. Determine how much money you can save and invest and the timeline for establishing these goals. Are you looking to generate passive income, build a retirement nest egg, or save for a significant purchase? Specific, measurable goals can help guide your decisions as you implement and monitor your ISP.   Setting the timeline for your ISP is also important. A timeline can help you stay motivated and focused, help you break down big goals into smaller tasks, and track your progress. It can also make you feel accountable for your progress and reduce the chance of procrastination.   Work with a financial professional.   A financial professional can provide personalized guidance based on

The 401(k) plan is an excellent way for HENRYs, high earners not rich yet, to save for retirement. Hitting the maximum contribution limit is a goal many work toward to reap the benefits of this tax-deferred saving strategy fully. But what happens after you have maxed out your 401(k) contributions? What are your other options for saving for an independent and comfortable retirement? This article provides additional investment strategies for HENRYs seeking to elevate their retirement savings outside their 401(k) plan. Additional retirement savings strategies IRAs One of the most common options when you’ve maxed out your 401(k) is contributing to an Individual Retirement Account (IRA). An IRA offers similar tax benefits to 401(k), where your contributions grow tax-deferred. Roth IRA The Roth IRA differs significantly from traditional IRAs and employer-sponsored 401(k)s, which are funded with after-tax dollars. The benefit of a Roth IRA comes at retirement, as you are able to withdraw funds, both contributions and accumulation, without incurring additional taxes, which is beneficial if you anticipate being in a higher tax bracket upon retirement. To qualify for a Roth IRA, your income must fall within certain limits, which are adjusted annually. HENRYS must talk to a financial professional to determine if they can invest in a Roth IRA based on their income. Health Savings Account (HSA) An HSA is another great supplemental retirement saving strategy. These accounts are used with high-deductible health plans, giving individuals the advantage of triple tax benefits: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. After age 65, non-medical withdrawals are taxed at the regular income tax rate, turning the HSA into a supplemental retirement income account. Taxable brokerage account Investing

An adequate emergency fund helps provide both security and flexibility   We’re living through interesting economic times. On the one hand, markets can be unpredictable and volatile. On the other hand, economic conditions are constantly changing. More than ever, people are asking: “How much money should I keep in cash?” Believe it or not, the answer is the same in turbulent times as it is in relatively calm periods. And it’s the same regardless of how “cautious” or “risky” your investment style might be. When it comes to how much you should keep in cash, you don’t want too much or too little — you want a “just right” amount based on your own budget and financial goals. The Importance of Cash in Your Portfolio Cash serves as the foundation of a solid financial plan. It can provide liquidity, safety, and confidence. Having cash on hand can help you manage everyday expenses, handle emergencies, and take advantage of investment opportunities without the need to sell off other assets. Finding the “Just Right” Amount Emergency Fund: Financial professionals typically recommend having three to six months’ worth of living expenses in an emergency fund. This ensures that you have enough to cover unexpected expenses like medical bills, car repairs, or temporary loss of income. If your job is less stable or you have dependents, consider aiming for six to twelve months’ worth of expenses. Short-Term Goals: If you have short-term financial goals, such as buying a house, taking a vacation, or making a large purchase within the next year or two, it’s wise to keep that money in cash. This way, you won’t have to worry about market fluctuations affecting your ability

529 College Savings plans are essential for saving for higher education expenses, and if used for education, accumulate tax-free. Since 529 plans came into existence in 1996, their popularity has continued to increase, with 529 plan assets crossing the $400 billion mark in 2021, according to Morningstar. 529 plans are qualified tuition plans that allow state and federal tax-free withdrawals of earnings and have the potential for tax deductions, which help offset the increasing cost of secondary education. 529 plans can be used in every state to pay for K-12 education expenses at private schools. Here is more about 529 plans you may want to know: There are two types of 529 plans- Pre-paid tuition plans- These 529 plans allow the account owner to purchase credits for later use at participating colleges or universities to pay for tuition. Education savings plans. The federal government guarantees education savings plans but not against loss due to the investment’s performance. Education savings plans utilize an investment account to save for the beneficiary’s future qualified higher education expenses, including room and board, fees, and qualified equipment expenses. 529 plans can now be used in every state to pay for K-12 education expenses at private schools. 529 plans can be a strategy to transfer wealth- Under the 2017 Tax Reform Act, an individual contributing to a 529 savings plan can frontload $75,000 (or five years’ worth of contributions) into one year without incurring federal gift taxes. A married couple who are parents, or grandparents, could contribute $150,000 into their grandchild’s 529 plan. It’s a unique way to transfer wealth for those who wish to make education a part of a legacy that provides a tax deduction and

Financial affluence often comes with various benefits and challenges, including the requirement for suitable insurance coverage. High-net-worth (HNW) families typically have a more complex risk profile than the average household, requiring a need for insurance to help preserve their wealth. HNW families tend to have various assets, each with its risk factors. These assets can range from luxury homes in different locations to yachts, private jets, fine art collections, jewelry, and vintage cars. A unique family requires unique insurance. HNW families may need additional coverage for increased liabilities and potential legal issues. Such realities make their insurance coverage requirements unique compared to most individuals’ insurance policies. Standard insurance products may not effectively address the elevated risk exposures. Homeowners and auto insurance considerations Conventional homeowners or auto insurance policies may fail to provide the appropriate level of coverage due to policy limits that do not match the value of the assets. For instance, a standard homeowner’s policy could limit certain valuables like art pieces or jewelry and, therefore, not fully cover these items in case of loss. Similarly, conventional auto insurance might need more coverage for high-end exotic vehicles. Personal liability coverage Another factor to consider is the global lifestyle often led by wealthy families. Assets and family members spread across multiple locations worldwide introduce an additional layer of risk that must be added to the coverage equation. More is needed to cover property and assets; personal liability coverage should also extend to account for incidents that may occur in diverse jurisdictions. Customized insurance solutions To mitigate these issues, HNW families need to consider tailored insurance coverage designed to address their unique needs. For example, an insurance plan that covers the

The average American worker will change jobs more than once in their lifetime. While there are multiple options such as leaving your 401(k) in your former plan if allowed, cashing out the account balance, or transferring the 401(k), many decide to roll over their old 401(k) to their new employer’s plan or other investment vehicles such as an IRA, Roth IRA, or an annuity. Here, we provide tips to help the rollover process go quickly and smoothly for you. 1.  Check with the 401(k) custodian or plan administrator to see if a rollover is possible. Considerations for a rollover include the time the account has been open and any fees associated with the outgoing transfer. If you’re still employed, and you want to move your 401(k) to another financial professional or custodian to manage, additional rules and fees may apply. 2. Request all transfer out paperwork from your HR department or the 401(k) custodian. Also, ask if other signatures or a ‘signature medallion stamp’ will be required on the paperwork to complete the transfer. Signature Medallion stamps guarantee the account. Your 401(k) custodian, plan administrator, or fund company accepting the transfer can provide the medallion stamp for you. 3. Include the latest 401(k) account statement with your transfer paperwork. This includes statements with your name, address, account number(s), and date within the last three to six months. 4. Realize you have options. You have a choice of where to transfer your 401(k)’s assets, the type of account, such as an IRA, Roth IRA, or annuity, and the type of investment strategies available to you in each investment vehicle. If allowed, you may also roll over your 401(k) to your new

It can be easy to lose focus on your own health needs, especially if you have other obligations. This can be an expensive mistake for several reasons. Consider these ways putting your health first can help you both physically and financially.   Outrun medical costs While finding the time to exercise can pose a challenge, it can reap big rewards in the long run. That’s because leading an active lifestyle may help you dodge health conditions like heart disease, high blood pressure, and cancer, each of which can come with pricey medical expenses, such as for prescriptions and doctor visits. By staying healthy and avoiding these costs, you may have more money to contribute to long-term financial goals, such as saving for retirement or paying off your mortgage. Reduce food bills Preparing healthy meals for yourself may require careful planning, but you might find it’s worth the effort. Americans spent about $2,375 on restaurant and takeout food in 2022. Since food made at home is generally cheaper, you could save by preparing your own healthy meals. Then you could possibly put some money toward time away at a spa or other restful location. Pay less for transportation You can spend less on maintaining your car or for bus, cab, or train fare if you walk or bicycle instead when possible. Plus, you’ll enjoy numerous health benefits that can possibly stave off expensive medical care. The additional exercise can strengthen your lungs, muscles, and joints. You might also be able to enjoy the many benefits sunshine can provide, such as improving your levels of vitamin D, which can help regulate your blood pressure and blood sugar levels. Maintain your weight Weight

A critical part of financial planning that is often overlooked is insurance. Having various insurance policies will provide different benefits to your financial plan, ranging from protection to tax breaks. In fact, insurance is a component of most financial plans, and some financial professionals are licensed to sell it themselves. Read on to learn more about the role insurance plays in financial planning and what policies you might consider. Risk Coverage All insurance policies are designed to mitigate risks. They help offset the potential financial loss you may experience due to a foreseen event. From death to hospitalization to a house damaged in an earthquake, insurance will help to absorb some of the financial burdens.1 Tax Benefits Insurance policies also provide tax benefits for the holder as well. Money paid toward life insurance premiums will be able to be deducted under Section 80C of the tax code. The premiums you pay for your health insurance may also be deducted from Section 80D of the tax law. Additionally, any death benefit from a life insurance policy will be tax-free, so your loved ones won’t be saddled with an additional tax burden.2 Insurance Policies You Should Have in Your Portfolio While there are insurance plans to cover everything from your jewelry to your long-term care, there are a few types of policies that you will want to have in your financial portfolio. Life Insurance: A term life insurance policy will provide a death benefit in the event of premature death. These policies are crucial to your financial planning as they will provide needed funds should the family’s provider pass away and the family faces a significant financial loss. Home Insurance: One of