Saved Pre-Retiree Thousand in Taxes

When I began working with this client, it was clear that his pre-retirement financial strategy needed optimization. His investment approach was resulting in significant tax liabilities that could be reduced with a more tailored plan. By reassessing his portfolio, we were able to align his investments with his risk tolerance while achieving tax savings.

• Initially, the client had $127,000 in cash invested in a mutual fund, which was not optimized for tax efficiency.
  
• His 2022 1099 statement showed over $5,000 in capital gains and more than $1,700 in dividend income, leading to a high tax burden.
  
• After our consultation, we sold the mutual fund, resulting in a net "loss" of $9,000. This loss can be carried forward over the next three years, offering potential tax relief.
  
• We reinvested in three new funds aligned with the client's risk parameters, which typically do not generate capital gains.
  
• As a result, there were no capital gains and reduced dividends, leading to tax savings. This is evident when comparing box 1a and 2a of the second 1099 with the first 1099.