Tax Planning Strategies That Can Boost Your Return
Key Takeaways
Tax planning is an active, year-round process that can improve returns without taking on additional market risk.
Strategic loss harvesting and Roth conversions can provide both immediate and long-term tax advantages.
Charitable giving strategies like DAFs and QCDs create opportunities to meet philanthropic goals while reducing taxes.
Asset location matters—matching the right investments with the right account types can improve after-tax performance for years to come.
From our Podcast#41 Live Plan Invest with Wealth Advisor Stephen M. Cash, CFP ®, recorded Monday, August 11, 2025.
In this episode of Live Plan Invest, Kevin, joined by Advisors Capital Management’s CFP® professional Stephen Cash and colleague David, dives into the often-overlooked role of tax planning in building long-term wealth. While markets have been volatile since the start of the year, Kevin points out that taxes remain one of the few variables investors can actively control, potentially adding 1–2% in returns annually through smart planning.
While market performance is largely outside of anyone’s control, taxes are a different story. Proactive tax planning can create meaningful advantages, sometimes adding an extra 1–2% to annual returns, by helping investors keep more of what they earn. This discussion explores five key strategies that can enhance portfolio growth, reduce future tax burdens, and create lasting benefits for heirs.
Strategic Loss Harvesting
Selling investments at a loss might seem counterintuitive, but those losses can be used to offset capital gains and lower taxable income. By carefully timing sales—such as waiting the required 31 days before repurchasing the same investment—investors can maintain market exposure while capturing valuable tax benefits. This flexibility can be especially useful during transitions like retirement, when managing taxable gains becomes critical.
Roth Conversions with a Plan
Converting traditional retirement accounts to Roth IRAs can eliminate future required minimum distributions (RMDs) and allow assets to grow tax-free for heirs. However, these conversions can also increase taxable income in the short term, potentially impacting Medicare premiums. A thoughtful, multi-year conversion plan can minimize these side effects while maximizing long-term savings.
Maximizing Charitable Giving
For those with charitable goals, donor-advised funds (DAFs) allow investors to make a large contribution in a high-income year, secure an immediate deduction, and then distribute funds to charities over time. Donating appreciated securities to a DAF can also eliminate capital gains taxes on those investments, further improving tax efficiency.
Giving Directly from IRAs
Once eligible at age 70½, investors can make qualified charitable distributions (QCDs) directly from IRAs to qualified charities. These gifts are excluded from taxable income and can count toward RMDs—making them an efficient way to support causes while reducing tax obligations. Proper documentation is essential to ensure these benefits are preserved.
Optimizing Asset Location
Not all accounts are created equal when it comes to taxes. Placing certain investments in taxable accounts and others in tax-deferred or tax-free accounts—often referred to as “asset location”—can help minimize taxes over time. For example, holding bonds in taxable accounts may provide better after-tax results, while keeping high-growth investments in Roth accounts can maximize tax-free growth.
Takeaway:
Tax planning isn’t just a once-a-year exercise—it’s an ongoing process that can quietly add substantial value to a portfolio over time. From harvesting losses to leveraging Roth conversions, charitable giving strategies, and optimizing asset location, the episode underscores five strategies that can benefit almost any investor. As Kevin closes, “These are conversations worth having now, because the benefits can compound for decades.”
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