The ONLY 5 Tax Strategies You Need In Retirement

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Two people retire on the same day. Same savings, same investments, same effort over 30 years of working. A few years later, one of them has a lot more money than the other.

It's not because of a better stock pick or a lucky year in the market. It comes down to five strategies almost nobody knows exist, and none of them require changing your life or taking on more risk.

We're going to cover:

- why a client giving $5,000 a year to charity was getting a zero dollar tax benefit for it, and the one move that changed that completely
- the stock someone bought for $5,000 twenty years ago that's now worth $150,000, and why selling it outright would be a mistake
- why only looking at this year's tax bill is quietly costing people tens of thousands over their lifetime
- the client planning to leave 20 percent of his estate to charity, and the $600,000 decision that changed what everyone actually walks away with
- what almost nobody thinks to check inside their own 401(k) before rolling it over
- why 196 companies in the S&P 500 lost money in 2025 even though the index was up 18 percent, and how that becomes a tax strategy

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The strategies, case studies, and examples discussed may not be suitable for everyone. They are hypothetical and for illustrative and educational purposes only. They do not reflect actual client results and are not guarantees of future performance. All investments involve risk, including the potential loss of principal.

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Transcript

Same Retirement Different Outcome

SPEAKER_00 0:00

Picture two people retiring on the exact same day. Same amount saved, same investments, same effort over their whole working life. A few years later, one of them has a lot more money than the other. Not because they picked better stocks or spent less money or got lucky timing the market. They just happened to use some specific strategies the other one didn't even know existed. Same saving, same portfolio, same everything, and still a completely different outcome, just based on what they knew and applied over the

Five Strategies Overview

SPEAKER_00 0:26

years. In this video, I'm going to share with you those five tax strategies most people don't know exist so that you can be the one that gets ahead and don't end up paying more in taxes than you need to. Let's dive in. Each of these five strategies are what to do with the money you already have. Not new investments, not new risks, just being much more intentional with the plan that you already have. And here's the best part none of these require changing your life. Most of them just require timing and coordination, and frankly, knowledge that these strategies exist so that you can implement them and keep living the life you're living with a whole lot more taxes saved along

1. Roth Plus Donor Fund

SPEAKER_00 1:01

the way. The first one is what I believe to be the most powerful one on the list. And here's what the strategy is it's stacking a Roth conversion with a donor-advised fund contribution. Now, most people have heard the concept of a Roth conversion. Everyone gets this. This seems basic by itself, and by itself, frankly, it kind of is. You're simply moving money from a traditional IRA or a pre-tax account into a Roth account. So the goal here is you pay taxes at a lower bracket today, or as you're doing the conversion, than you otherwise would be paying if you were to pull that money out in the future. Pretty straightforward, pretty simple, lots of value by itself, but incomplete in a lot of ways. The real power here is when the income that's created from that Roth conversion can be offset by a big deduction. Now, here's where I see this being most powerful. I'll talk to clients, and they might be contributing, let's say, $5,000 per year to charity, and they're doing that indefinitely. Well, typically, by the time clients are in retirement, their mortgage is paid off, they're limited in terms of how much they can deduct in state and local taxes, so they're not getting to itemize their deduction. So I showed them something that's very interesting to them. I said, let's assume you keep doing this for the next 30 years. You have gifted $150,000 to charity. Now you're not doing it for the tax benefit, but you got zero tax benefit for doing that. Because you're under the standard deduction amount, you don't get any benefit on the tax side for gifting that. But what if we did this? What if we looked to the next 30 years and said, we know you're going to give $150,000? What if we fund $150,000 today into a donor-advised fund? Now you retain control over those assets in the sense that you get to recommend the timing of when the gift happens. But the beauty of this is you get the full deduction amount today. So whatever giving you're going to do, you're simply funding that today, and you can still gift the $5,000 annually like you otherwise would have. But here's where it gets interesting. Now all of a sudden, you have $150,000 deduction this year. Not just that, but you can probably stack your state and local taxes on top of that in any other itemized deductions. So this gives you a massive deduction this single year, which can be used to offset a massive tax liability that could be created by an even higher Roth conversion. So what you're doing is you're intentionally coordinating the timing of realizing more income on the Roth conversion side with the timing of realizing that deduction on the donor advised

Supercharge With Stock Gifts

SPEAKER_00 3:18

fund side. Let's take this one step further to make it really interesting. Maybe you're listening and maybe you have a stock that you purchased 20 years ago and you purchased that stock for $5,000. And today that stock is worth $150,000. That's great, but it's not actually worth $150,000 to you because as soon as you sell it, you're gonna be paying a pretty big tax bill. The actual value to you might be closer to $100,000 to $120,000 depending on your tax bracket. But what if you did this? What if instead of you selling that stock and paying taxes, you gifted that stock to your donor advised fund? You don't pay any taxes on the gains. The donor advised fund can then sell that stock and pay nothing in taxes. You get the full $150,000 deduction for doing so. And now what you have is a massive tax deduction. You've avoided a significant tax bill on those gains, and you can still do the same giving you otherwise would have done, but now you have a giant deduction that you can use to offset a Roth conversion with. So when you implement a strategy like this, even if you're not gifting huge sums every single year, when we can pull forward the value of those gifts, there's a really powerful planning opportunity here of can you offset the impact of that conversion, which frankly means you can convert even more from your IRA to your Roth IRA so you have more tax-free growth in the future. Now there are details on this. There's limits as to how much you can deduct. Those limits change whether you're gifting cash for securities. So talk to your financial advisor, talk to your CPA, make sure this is coordinated. But when it is, this can be a single decision that adds tens of thousands of dollars, if not more, to the value of your portfolio and your plan over the course of your retirement. That one strategy alone can be worth a lot. But it's not the only place people leave money on the table. The other four are just as easy to miss and people do not know they exist.

2. Lifetime Tax Map

SPEAKER_00 5:03

The second tax strategy is map your lifetime tax liability, not just this year's. This is a very common scenario that I see. You are filing your taxes for last year. You see what your taxable income is, you see if you can get any last-minute deductions, and you do something there. Now, this might mean doing a Roth conversion to fill up a tax bracket, this might be making an IRA contribution to lower your tax bill. But whatever it is, it's typically focused on one single thing, and that is this year's tax bill. That is an incomplete way of looking at this. What you need to be doing to do this properly is look at your lifetime tax strategy. So imagine this for a second. You have a plan that factors in your social security income, dividend income, capital gain income, withdrawals from your IRAs, your Roth IRAs, all the various things that are gonna happen, not just today, but over the next 20, 30 years. What that gives you is that gives you a projection of what might your taxable income be over the next 20, 30 years. And then you can overlay expected tax brackets on top of that. When you do that, you get a very clear visual of where do opportunities exist of should I be doing Roth conversions this year, or is this actually gonna cost me? Maybe there's other years that would be better to do the Roth conversion, and maybe this would be a good year to implement a tax deferral strategy. So where you're trying to realize taxes or defer taxes, those are the big levers that you want to pull year by year, but you can't do that until you've mapped everything. Once you've mapped everything and you have a lay of the land, you can make some really strategic decisions that have massive impact on the rest of your retirement, but it involves taking a big step back. If all you're looking at is this year. And frankly, the reason most people only look at one year is that's the tools that we've been given. You either have TurboTax or your CPA who gives you an illustration of where you stand this year, but it's much harder to visualize what that's going to look like over the next several years. But the ultimate goal is not the smallest tax bill this year. It's the lowest lifetime tax liability. And you can only see that if you understand what the next several years and decades even will look like for you. Now, real quick, if you're within a few years of retiring and you have a million dollars or more in your portfolio, I created the video below called the Sequoia System Video. It shows you exactly how we do just this, how we take that portfolio and turn it into a reliable income stream and implement a tax strategy on top of that to minimize that lifetime tax liability. If you're interested in seeing more, click the top link in the description or the pinned comment below to see how we use Sequoia system to solve for situations just like this.

3. Charity While Living

SPEAKER_00 7:30

The third tax strategy is this give to charity while you're alive, not just in your estate plan. I was just talking to a client, and this client wanted to leave a good amount, they want to leave a percentage of their portfolio to charity when they passed. Now we looked at that. We said, okay, well, what percentage do you want to leave? We said, well, about 20%. And the other 80% was split evenly between siblings. Said, okay, let's model out what that looks like. We ran a projection over the next 20 to 30 years. That projected gift to the charity came out to more than $2 million. And that was in today's dollars. So the nominal amount would actually be much more at that time. So I showed him this. I said, look, if you do this, this is wonderful. I'm glad that you're doing this. You are getting zero tax benefit by leaving this money to charity upon your passing. Is there a way to pull that gift forward? Whether that's a charitable trust, whether that's a donor-advised fund, whether that's anything that allows you to use the value of that gift to get a deduction while you're still living that can allow us to do more Roth conversions, to offset gains from selling property or from selling stock or from any other type of taxes that we're going to pay. So think about the timing of when you're doing things. Look at your estate plan. Who is money going to? Is it kids? Is it charity? Is it someone else? If there's anything that can be pulled forward, let's do that. Don't leave this massive tax benefit untapped. It's wonderful that you're gifting to charity, very generous that you're gifting to charity. But let's do something with that to make sure that the charity still benefits, even if it's not until you're passing, but you get a deduction for doing so. So here's exactly what that could look like. We know that there's maybe a couple million dollars this client's gonna ultimately leave to charity, using him as an example. Well, if that's a couple million dollars, we're not gifting two million today. Because keep in mind, whatever is gifted today is gonna continue growing for the future. Now, this could be done with a charitable trust that generates income for you. This could be done with a donor-advised fund, a foundation, many different ways to do it. But let's say we worked backwards to say based upon some assumed growth rate over some period of time, a $600,000 gift today would grow to $2 million at the end of their lifetime. What do we do? We make that $600,000 gift today, which gives us a huge deduction. We update the estate plan. So it's no longer 20% going to charity and then 20% to siblings. Instead, each of the siblings now gets 25% of the terminal value. And the charity doesn't get anything according to the trust, but that's because we've already ceded that gift. Let's say that gift is in the donor-advised fund. The client still retains full control over that. I mean, if they want to start making annual gifts a day, full freedom to do so. But most importantly, there's now a $600,000 deduction that can offset Roth conversions, that can offset them selling a rental property, that can offset the gains they'd be paying taxes on when they sell those concentrated securities. So it's simply maneuvering the timing of when these are realized to unlock massive tax benefits that aren't actually changing who's ultimately getting money when they pass. It's just changing the timing when you do things to make sure that's working in your favor. So these first three are all about giving and converting. The last two are about things people don't actually think to check what's sitting in your accounts.

4. NUA For Employer Stock

SPEAKER_00 10:30

This next one is about using net unrealized appreciation if you have employer stock sitting in your 401k. Let me use an example to explain how this works. Let's assume that within your 401, you have purchased $50,000 worth of your company stock. So this might be worth $200,000. Maybe you have another $800,000 worth of securities in that account for a total of a million dollars. Well, typically, if you just roll all of that over to a traditional IRA one day, then as you draw that money out, it's all subject to ordinary income tax rates. Ordinary income tax rates are the highest tax rates you can pay. But the funds that are in your company's stock, those could be taxed differently. Net unrealized appreciation in implementing that strategy would look like this. Instead of rolling everything over, you would take that $200,000 that's in company stock. You would move that and that alone, so not the rest of the funds in your 401, but the $200,000 of company stock into a separate brokerage account. You pay ordinary income taxes, but only on that first $50,000, the basis, the what you put in. So that's subject to ordinary income rates, which are higher. But the remaining $150,000 of gains, those are subject to capital gains treatment once you actually sell the stock. So this is doing a couple of things. Number one, it's giving you better tax treatment on the gains portion of that stock. And number two, it's still giving you full control over the timing of when you realize those gains. This money is moved into a brokerage account and you get to decide, you get to control the timing of when you realize that. Now here's a pro tip here, going back to the first point that I made. If you have company stock in your 401k and if it's appreciated quite significantly, well, if you execute net unrealized appreciation and you move that portion of your stock into a brokerage account, now maybe that becomes some of the seed capital that you use to fund the donor-advised fund. In that case, you don't pay any taxes on the gains on that company stock. And you can start to see how stacking some of these strategies leads to even more value for you over the course of your retirement. Now, with net unrealized appreciation or NUA for short, there are some very specific steps that you need to execute to get this right. So make sure you're talking to your advisor, make sure you're talking to your CPA. If you miss one of those, all the tax benefits are out the window. So big disclaimer there that this is a powerful benefit, but you must execute it properly.

5. Bank Losses Strategically

SPEAKER_00 12:48

Then the fifth tax strategy that almost no one knows about is bank your losses and take that much further than most people think about. Now, here's the simple version. You own, let's say, an SP 500 index fund. The value of that fund drops. You sell it. What does that do? It realizes a loss that you can use on your tax return to offset some gains. Now you don't want to stay out of the market, so you buy a new fund. Now that fund can't be identical, but if you buy a fund that's pretty similar, what you're effectively doing is maintaining, more or less, your exposure to the S P 500 or large cap US stocks while banking that loss. So if you have a million dollar portfolio and it's all an S P 500 index fund and the market drops 20%, you drop down to $200,000. You sell it, you purchase a similar fund, but not an identical fund. And what you now have is $200,000 of losses that can be banked against future gains that you realize. Now that sounds good in theory, but on average, the SP 500 and really the market as a whole goes up more often than it goes down. But here's the interesting thing the S P 500 as a whole goes up a lot more than it goes down, but all the underlying components within it do not. Let's use 2025 as an example. In 2025, the SP 500 as a whole was up right about 18%. It's about 17.9%, but let's just call 18% to use a round number. Here's what's important to remember though that 18% is a weighted average of how each individual component within the SP 500 has actually performed. And would you believe it if I told you that 196 of the 500 companies in the SP 500 actually posted a negative return in 2025? So just to reiterate, the index as a whole had a very strong double-digit return. But nearly 40% of the underlying components, the underlying companies within the SP 500 had a loss, went down. Now that's not uncommon. In fact, that's very close to long-term averages of the markets going up. It's not uncommon for 30, 40% or more of the underlying securities to actually drop. So here's the takeaway. Here's the tax strategy. What if instead of just owning the SP 500? And by the way, none of this is investment advice. I'm simply using that for illustrative purposes. What if instead of just owning the fund, you owned all 500 individual components? Well, in your like 2025, if you just own the fund, you just experienced the 18% gain. That's great, but there's no tax loss harvesting to be had. If you owned all the individual components, you get to tax loss harvest the specific stocks or the specific securities that dropped in value, which means at least 40% of those holdings you could sell, wait 31 plus days, and then repurchase them to avoid any wash sales. And effectively, you're not going to get the exact same return, because keep in mind when you sell, you're out of the market for that time. Now you can buy a similar security, but you can't repurchase the same exact security for 31 plus days. But by doing that, you've maintained similar exposure, which means your return should be more or less similar, but you're banking these losses. Okay, that's part one. So that's not the strategy by itself. Those losses by themselves don't do much for you. But if you keep banking these losses, and by the way, there's a way to take this to even more of an extreme using a long short SMA, typically only worthwhile if you have much larger brokerage account balances and you've got some significant gains you need to offset. But there's ways to even accelerate this. And as you bank those losses, what you're doing is you're setting yourself up so that in the future, maybe you're selling a rental property, maybe you're selling a business, maybe you're selling some of your stocks that have gone up in value quite a lot. You can use these losses to offset that. Now I can hear what some of you are saying, which is, James, sure, you're realizing this loss, but every time you do that, you are embedding more gains. You know, if you go from a million dollars in the S P 500, it goes down to 800,000, you sell, repurchase similar security, and now it gets back to a million dollars. Cool, you're back to a million and you have some losses, but now you also have $200,000 of unrealized gains. That is very true. But most people who have these brokerage accounts aren't spending them down in their lifetime. Meaning once you ultimately pass, you use this account, you use these losses to offset a lot of the taxes you otherwise would have paid. This simply passes to your spouse, your children, your beneficiaries. And there's a step up in basis when that happens. So you're maximizing, you're squeezing all the juice you possibly can out of these assets while still maintaining a similar investment exposure. And by doing so, you're shielding yourself from taxes you otherwise would have paid. And your heirs, when you inherit these, get a step up in basis, which means they're not paying taxes on any of those gains, anyways. So when you look at that, that can be a powerful way to shield yourself from a lot of taxes you otherwise would have owed.

Coordinate Your Whole Plan

SPEAKER_00 17:29

Now, none of these strategies require saving more or changing the overall allocation of your portfolio. They just require coordination, coordinating between your advisor or your CPA, or hopefully you have an advisor that does that on your behalf. But the biggest one, pairing a donor-advised fund contribution with a Roth conversion, that is one that should be revisited anytime you're thinking about making a charitable gift. One really important thing to understand here is none of these tax strategies should exist in a vacuum. Your tax strategy needs to be closely and tightly implemented alongside your investment strategy, which needs to be tightly informed by your withdrawal strategy. And all these ultimately should be supporting what you want your retirement to look like. If that's something you would like help coordinating, check out the Sequoia System video below. It's the top line in the description, it's the pinned comment below. I walk you through exactly how Root Financial Sequoia System is designed to take situations just like this and implement it on your behalf so you can live the retirement you've dreamed about. And if this was useful, the next video to watch is this one about the real math of working just one more year.