Taxes and Your Investments

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Taxes and Your Investments

Here at One Bridge, we talk a lot about tax-efficiency and your investments. Add value to your overall portfolio and overall net worth by controlling what you pay in taxes as much as you can.

But what does that mean and how do we do it?

Here’s a summary:

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Withdrawal Strategies


Reduce the amount of taxes owed by withdrawing in an optimal order of taxable, pre-tax, and tax-free accounts



Qualified Charitable Distributions


Reduce the amount of taxes paid by donating part of your RMD to charity


Securities Backed Lines of Credit


Avoid selling and realizing gains by taking out a loan using your investments as collateral


Exchange Funds


Diversify concentrated holdings without realizing gains


Asset Location



Potential higher return assets placed inside Roths, while balancing other return assets like bonds depending on tax-brackets and income needs


Capital Gains Tax Management


Strategize to have years in a lower capital gains tax bracket and realize gains in those years


Tax Loss Harvesting



Offset your taxable income and realized gains with tax losses, while reinvesting the assets right away – optimal in drawdowns


Net Unrealized Appreciation Rule


Allows the lower capital gains tax rate to be used instead of the income tax rate


No AUM Fees out of Roth IRAs


Reduces the drag on your tax-free investments – the fees come out of a taxable account


Roth Conversions


Convert pre-tax money to after-tax Roth money – optimal in a drawdown


Backdoor Roths


Contribute to a Roth regardless of income limits potentially


Roth 401Ks



Increase the amount of tax-free investments beyond the IRS Roth IRA rules




Frontload contributions before retirement to reduce current taxes


Exchange Traded Funds vs. Mutual Funds


Utilize tax-advantaged traits of ETFs inside taxable accounts and mutual funds inside pre-tax and tax-free accounts


Intentionally Defective Grantor Trusts


Utilize tax rules to minimize estate taxes

10 Yr Rule vs. Eligible Designated Beneficiaries


Consider all withdrawal options and tax-consequences for inherited traditional IRAs – rule of thumb is to defer as long as possible, but the 10 Yr rule also provides added flexibility within 10 years.







Tax-deductible and tax-free investments accounts when used for qualified education expenses for college and currently k-12


Health Savings Accounts


The triple tax-advantaged account for qualified medical expenses


Qualified vs ordinary dividends


Qualified dividends are taxed at capital gains rates while ordinary dividends are taxed at federal income tax rates


Long term gains vs short term gains


Hold investments longer than one year to avoid federal income tax rates and apply it towards capital gains tax rates

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