Andrew Schaetzke, CFP® 10/9/25 Andrew Schaetzke, CFP® 10/9/25

Am I Eligible For Medicare & How Do I Enroll?

Medicare Open Enrollment (October 15 – December 7, 2025) is the time to review your current healthcare coverage and make changes for the year ahead.

By Senior Advisor Andrew Schaetzke, CFP®

Medicare Open Enrollment (October 15 – December 7, 2025) is the time to review your current healthcare coverage and make changes for the year ahead. Determining when you must enroll in Medicare can be complicated. Depending on your situation, you may be automatically enrolled or you may have to proactively enroll.

To help simplify the process, we’ve included two guides that outline key decisions and considerations, including:

Eligibility before age 65
Eligibility with fewer than 40 work credits
Applicable premiums
Impact of age on enrollment
Automatic enrollment events
Initial Enrollment Period rules
Coverage start dates

Please feel free to reach out to your SJS advisor at any time to support you in the process. We are happy to help talk through any questions so you can feel confident about your Medicare choices for this coming year.

Please click on the images below to view the PDF.

Flowchart for Medicare Eligibility Part A and B

Important Disclosure Information & Sources:

This resource was created by fpPathfinder. SJS pays an annual subscription in order to license resources from fpPathfinder.

There is no guarantee investment strategies will be successful. Past performance is no guarantee of future results. Diversification neither assures a profit nor guarantees against a loss in a declining market.

Advisory services are provided by SJS Investment Services, a registered investment advisor with the SEC. Registration does not imply a certain level of skill or training. SJS Investment Services does not provide legal or tax advice. Please consult your legal professional or tax professional for specific advice.

Important Financial Planning Numbers For 2025

To help you financially plan for 2025, we provide this resource with important numbers for the year.

By Senior Advisor Andrew Schaetzke, CFP®.

When planning for the coming year, it can be hard to keep track of all of the new financial and tax information. There are many important financial numbers to be aware of for 2025, including:

Tax rates and brackets, such as for federal income tax, capital gains tax, Social Security tax, and estate tax
Certain tax deductions, exemptions, and credits
Retirement plan (401(k), 403(b), IRA, SIMPLE IRA) and Health Savings Account (HSA) contribution limits
Required minimum distribution (RMD) table for certain tax-deferred retirement accounts
Medicare premiums & IRMAA surcharges

To help you financially plan for 2025, we provide the resource below. As always, we are here to help your family throughout your financial journey. We can provide resources, experience, and strategies that may be valuable to you. Please feel free to reach out to us if you have any questions.

Please click on the images below to view the PDF.

Important Disclosure Information & Sources:

This resource was created by fpPathfinder. SJS pays an annual subscription in order to license resources from fpPathfinder.

Hyperlinks to third-party information are provided as a convenience.

Important Financial Planning Numbers For 2024

To help you financially plan for 2024, we provide this resource with important numbers for the upcoming year.

By Senior Advisor Andrew Schaetzke, CFP®.

When planning for the coming year, it can be hard to keep track of all of the new financial and tax information. There are many important financial numbers to be aware of for 2024, including:

Tax rates and brackets, such as for federal income tax, capital gains tax, Social Security tax, and estate tax
Certain tax deductions, exemptions, and credits
Retirement plan (401(k), 403(b), IRA, SIMPLE IRA) and Health Savings Account (HSA) contribution limits
Required minimum distribution (RMD) table for certain tax-deferred retirement accounts
Medicare premiums & IRMAA surcharges

To help you financially plan for 2024, we provide the resource below. As always, we are here to help your family throughout your financial journey. We can provide resources, experience, and strategies that may be valuable to you. Please feel free to reach out to us if you have any questions.

Please click on the images below to view the PDF.

Important Disclosure Information & Sources:

This resource was created by fpPathfinder. SJS pays an annual subscription in order to license resources from fpPathfinder.

Hyperlinks to third-party information are provided as a convenience.

Important Financial Planning Numbers For 2023

To help you financially plan for 2023, we provide this resource with important numbers for the upcoming year.

By Senior Advisor Andrew Schaetzke, CFP®.

When planning for the coming year, it can be hard to keep track of all of the new financial and tax information. There are many important financial numbers to be aware of for 2023, including:

Tax rates and brackets, such as for federal income tax, capital gains tax, Social Security tax, and estate tax
Deductions, exemptions, and tax credits
Retirement plan (401(k), 403(b), 457, IRA SIMPLE IRA) and Health Savings Account (HSA) contribution limits
Required Minimum Distribution (RMD) table for tax-deferred retirement accounts
Medicare premiums & IRMAA surcharges

To help you financially plan for 2023, we provide the resource below. As always, we are here to help your family throughout your financial journey. We can provide resources, experience, and strategies that may be valuable to you. Please feel free to reach out to us if you have any questions.

Please click on the images below to view the PDF.

Important Disclosure Information & Sources:

This resource was created by fpPathfinder. SJS pays an annual subscription in order to license resources from fpPathfinder.

Hyperlinks to third-party information are provided as a convenience.

What Financial Issues Should You Consider Before Year-End?

To help you assess financial issues to consider for the rest of 2022, we provide this resource.

By Senior Advisor Andrew Schaetzke, CFP®.

With the end of the year approaching, now may be a good time to review your investments and other financial matters for the rest of 2022, as well as plan for 2023. To help you assess financial issues to consider before year-end, we provide the resource below. As always, we are here to help you and your family throughout your financial journey. We can provide resources, experience, and strategies that may be valuable to you. Please feel free to reach out to us if you have any questions.

Please click on the images below to view a PDF version.

Important Disclosure Information & Sources:

This resource was created by fpPathfinder. SJS pays an annual subscription in order to license resources from fpPathfinder.

Advisory services are provided by SJS Investment Services, a registered investment advisor (RIA) with the SEC. Registration does not imply a certain level of skill or training. SJS Investment Services does not provide legal or tax advice. Please consult your legal or tax professionals for specific advice.

Hyperlinks to third-party information are provided as a convenience.

Helping Your Parents Financially Prepare For The Future

To help you assess ways that you can assist your parents with financial matters, we provide this resource.

By Senior Advisor Andrew Schaetzke, CFP®.

As we are growing up, we rely on our parents for so many things, such as shelter, food, money, and love. As we become adults, we usually rely on our parents less and less. At the same time, many children want to help their aging parents, or parents may even need help as they grow older.

Unfortunately, helping parents plan for the future has become an increasingly pressing concern. Largely due to effects of the COVID-19 pandemic, the average life expectancy for Americans has declined over the last couple years.[1]

By creating plans ahead of time, you can help your parents feel more prepared and ease their burdens should they experience any troubles. There are many financial matters that you can potentially assist your parents with, including:

Planning for the desired quality of assisted living conditions and care that they may want and need as they grow older
Managing their bills, particularly relating to insurance and medical expenses
Organizing their documents, passwords, and other important information
Developing their estate plan
Tax planning

To help you assess ways that you can assist your parents with financial matters, we provide the resource below. As always, we are here to help your family throughout your financial journey. We can provide resources, experience, and strategies that may be valuable to you. Please feel free to reach out to us if you have any questions.

Important Disclosure Information & Sources:

[1] “Provisional Life Expectancy Estimates for 2021“. Elizabeth Arias, Betzaida Tejada-Vera, Kenneth D. Kochanek, & Farida B. Ahmad, August 2022, cdc.gov.

Hyperlinks to third-party information are provided as a convenience.

Should You Pay Off Your Mortgage Early?

To help you figure out whether you should pay off your mortgage early, we provide this resource.

By Senior Advisor Andrew Schaetzke, CFP®.

For many people, their home serves as a place to live, where they raise their families, and as a store of wealth. From a financial perspective, their home is the single biggest asset for the average American.[1] Because of that, people often spend a lot of time considering the finances for their home.

One of the foremost financial considerations for most people when determining what home to buy is the type and terms of a mortgage. Many people have a specific repayment schedule on their mortgage over a time period often ranging from 10 to 30 years.

Sometimes, people have the ability to pay off part of their mortgage early. From a financial perspective, just because you have the ability to pay off part of your mortgage early doesn’t necessarily mean that would be best. The decision depends on many factors including:

Your upcoming liabilities
Your opportunity costs, such as your ability to earn a different return from investments
Your emergency fund
Economic conditions
Interest rates, and your ability to refinance
What would help you sleep at night

To help you figure out whether you should pay down your mortgage early, we provide the below resource. As always, we are here to help you throughout your financial journey. We can provide resources, experience, and strategies that may be valuable to you. Please feel free to reach out to us if you have any questions.

Important Disclosure Information & Sources:

[1] “Survey of Consumer Finances (SCF)“. Board of Governors of the Federal Reserve System, 2020, federalreserve.gov.

Hyperlinks to third-party information are provided as a convenience and we disclaim any responsibility for information, services or products found on websites or other information linked hereto.

Should You Use A Donor-Advised Fund?

To help you figure out the best way for you to donate to the organizations you care about, we provide this resource.

By Senior Advisor Andrew Schaetzke, CFP®.

With the growth in global investment markets in recent years, many investors are donating more to their communities and the causes they care about than ever before.[1] Based on Giving USA’s 2021 Annual Report, U.S. charities received a record $471.44 billion in donations in 2020, with more than two-thirds of these donations coming from individuals and families.[1]

Figuring out the best way for you to donate can be complex. There are a lot of different options on how to donate, including:

Each option has its own benefits and tradeoffs regarding taxes, costs, and flexibility. By understanding your options and creating the charitable strategy most appropriate for your situation, you can increase the chances that the organizations you most care about will receive the money that you intend for them.

To help you figure out the best way for you to donate to the organizations you care about, we provide the below resource. As always, we are here to help you as you begin your charitable journey. We can provide resources, experience and strategies that may be valuable to you. Please feel free to reach out to us if you have any questions.

Important Disclosure Information & Sources:

[1] “2021 Annual Report“. Giving USA, 2021, givingusa.org.

Hyperlinks to third-party information are provided as a convenience and we disclaim any responsibility for information, services or products found on websites or other information linked hereto.

MarketPlus Investing

Video on our MarketPlus Investing philosophy.

Important Disclosure Information:

MarketPlus Investing® portfolios consist of institutional quality registered investment companies. Investment values will fluctuate, and shares, when redeemed, may be worth more or less than original cost.

Statements contained in this video that are not statements of historical fact are intended to be and are forward looking statements. All forward looking statements are inherently uncertain as they are based on various expectations and assumptions concerning future events and they are subject to numerous known and unknown risks and uncertainties which could cause actual events or results to differ materially from those projected.

How Your Finances May Change In 2022

We detail changes to official federal legislation, proposed legislation, and other financial planning considerations that may impact you and your family in 2022.

By Senior Advisor Andrew Schaetzke, CFP®.

Last fall when the Build Back Better Act was introduced in Congress, we expected taxes could increase significantly for certain families as well as businesses. However, the proposed tax plan has changed often and significantly during congressional negotiations. While the legislation is not yet finalized, if passed in 2022, we do not expect that the Build Back Better tax plan will result in as many big changes as we initially anticipated.

Based on current proposed legislation, the following points summarize the provisions that could impact you and your family:

New federal income tax surcharge on higher earners: Households would have to pay an additional 5% surcharge on modified adjusted gross income (MAGI) above $10 million, as well as an additional 3% on MAGI above $25 million. For earners with greater than $25 million in MAGI, this could result in a top federal tax rate around 45%, which could not be decreased by taking large itemized deductions or the qualified business income deduction.[1]
Expansion of the 3.8% net investment income tax (NIIT) for S corporations and partnerships: The 3.8% net investment income tax on capital gains, taxable interest, dividends, passive rents, annuities, and royalties would be expanded to apply to active business income for pass-through firms.[1]
State and local tax (SALT) deduction for federal income taxes: The cap on the SALT federal income tax deduction would increase from $10,000 to $80,000 starting in 2022 through 2030.[1]
Extension of the enhanced Child Tax Credit (CTC) through 2022: The enhanced child tax credit - $3,600 for each child under age 6, as well as $3,000 for each child ages 6-17 - would extend into 2022 for joint filers with MAGI less than $150,000 ($112,500 for single filers).[1]
Limitations on Individual Retirement Accounts (IRAs) contributions for wealthier households: No longer would allow for contributions to IRAs with balances greater than $10 million. Additionally, IRAs with balances greater than $10 million may have accelerated required minimum distribution (RMD) requirements.[1]
Increased IRS funding: The IRS would receive increased funding for hiring and improving operations, which could lead to more audits for wealthier households.[1]

While the effective date for this legislation is uncertain, we expect the changes could be effective retroactively, as of January 01, 2022.

There have been some other annual cost-of-living and government-controlled changes that may affect you and your family in 2022:

5.9% cost-of-living adjustment for Social Security: For individuals currently or planning to receive Social Security payments in 2022, your benefits will be 5.9% higher than 2021 due to inflation.[2]
Lower required minimum distributions RMDs from Traditional IRAs, Traditional 401(k)s / 403(b)s / 457 plan, and Roth 401(k)s / Roth 403(b)s: If you are required to take an RMD from one of these accounts, your RMD as a percentage of your portfolio will be slightly lower in 2022 due to an increase in life expectancy.[3]
Federal student loan interest payments frozen until May 01, 2022: Due to ongoing effects from the pandemic, the Biden administration extended a freeze on federal student loan interest payments from February 01, 2022 to May 01, 2022.[4]
Changes to retirement plan contribution limits, estate tax exemption, and gift tax exemption: Various limits and exemptions have increased for 2022, primarily resulting from inflation. For example, the maximum employee contribution limit to 401(k)s / 403(b)s / 457 plans is increasing from $19,500 to $20,500. Additionally, the annual gift tax exemption is increasing from $15,000 to $16,000. You can find more information here.

As part of your financial planning process for 2022, there are a few ways that you can implement your plan while potentially lowering your federal income taxes:

Contribute to tax-advantaged investment accounts: Depending on your eligibility, you may be able to contribute to tax-advantaged investment accounts such as 401(k) / 403(b) / 457 retirement plans, IRA, Health Savings Account (HSA), and 529 plans in order to save for specific purposes while also potentially lowering your taxes. Additionally, you have until April 15, 2022 to contribute to your IRA and HSA for 2021 if eligible.
Charitable contributions and donor-advised funds: Because of the rise in many investment markets over the past few years, many people hold taxable investments with large unrealized gains. By directly gifting these taxable investments to eligible charitable organizations or creating a donor-advised fund, you can potentially lower federal income taxes for 2022 while giving to the organizations you want to support.
Tax loss harvesting: Particularly during volatile market periods, tax loss harvesting allows you to sell eligible taxable investments with losses, and use these losses to offset realized taxable capital gains. With tax rates expected to increase for certain taxpayers in 2022, tax loss harvesting could prove increasingly valuable.

As federal legislation evolves, we will continue to update you on any changes that may impact you. Additionally, you can find well-written summaries of the proposed financial changes on the Tax Foundation (taxfoundation.org) website. As always, please feel free to reach out to us if you have any questions or want clarity on how the proposed changes may affect you.

Important Disclosure Information & Sources:

[1] “House Build Back Better Act: Details & Analysis of Tax Provisions in the Budget Reconciliation Bill“. Tax Foundation, 02-Dec-2021, taxfoundation.org.

[2] “Cost-of-Living Adjustment (COLA) Information for 2022“. Social Security, ssa.gov.

[3] “Required Minimum Distribution Calculator“. U.S. Securities and Exchange Commission, investor.gov.

[4] “The White House Will Freeze Federal Student Loan Repayments Until May 1“. Katie Rogers and Tara Siegel Bernard, 22-Dec-2021, nytimes.com.

Hyperlinks to third-party information are provided as a convenience and we disclaim any responsibility for information, services or products found on websites or other information linked hereto.

Saving For Emergencies

Emergency savings can help you weather the toughest times, providing a cushion so that you can stay committed to your financial plan for the long-term.

By Senior Advisor Andrew Schaetzke, CFP® and Investment Associate Bobby Adusumilli, CFA.

Do you have money saved for emergencies?

Emergency savings can provide support in case something very unexpected happens. Unfortunately, most people and businesses don’t have enough saved. According to Bankrate’s 2021 Emergency Savings Survey, half of Americans have less than three months’ worth of expenses covered in an emergency fund.[1] That total includes 1 in 4 Americans who specified that they don’t have an emergency fund.[1] Based on research from the JPMorgan Chase Institute from 2016, approximately 50% of small businesses have 27 cash buffer days or less, meaning they would run out of cash within 27 days if revenue suddenly stopped coming in.[2]

By preparing for emergencies in advance, you are controlling what you can in order to be ready for the unexpected. Emergency savings can give you some peace of mind and allow you to maintain your focus on the long-term with your finances. We hope the below information helps you figure out what to do with your emergency savings.

How much should I save for emergency savings?

For most people, we recommend that you have at least 3-6 months' worth of living expenses in emergency savings. Some people like to have >1 years' worth of living expenses, particularly if they have health problems, dangerous jobs, or would just sleep better knowing they have more money saved.

How quickly should I fund my emergency savings?

Below are some general considerations, though please work with your financial professional to develop a plan appropriate for you:

First pay off any necessary short-term expenses.
Prioritize paying off any high-interest debts. However, many people like the security of also having emergency savings. Even if you prioritize paying off high-interest debts, you can still save slowly (such as $20 per week) for emergency savings.
After high-interest debts are paid off, prioritize growing your emergency savings to at least 3-6 months' worth of living expenses. While doing this, continue paying off any lower-interest debts.
After you paid off your high-interest debts and have enough emergency savings, then consider saving and investing more via tax-advantaged accounts. You can come up with a plan to help you save a little each week while also continuing to pay off any lower-interest debts.

When should I use my emergency savings?

When this cash is necessary for an urgent expense. While each situation is different, we typically recommend that people use their emergency savings before withdrawing from any long-term investments. However, we believe that people should replenish their emergency savings as soon as feasible.

Where should I keep my emergency savings?

The goal of emergency savings is to have cash for when you need it. Behaviorally, people are more likely to spend their savings unnecessarily if they frequently view the balance and if it is stored in the same place as other financial assets.[3] Therefore, we think people should keep their emergency savings separate from other financial assets.

Below are some options on where you can store your emergency savings:

Savings Account

Many online banks, local banks, and credit unions offer secure and low-hassle savings accounts that provide you with some monthly interest. The interest is subject to federal, state, and local income taxes, but the interest is usually more than you would receive in a checking account.

Make sure to choose a savings account which is FDIC-insured up to $250,000, as well as a trusted and reliable financial institution that will allow for quick and penalty-free withdrawals when needed.[4] For additional information on potential savings accounts, see this website from Nerdwallet.[5]

High-Quality Short-Term Bonds

Another option is to invest in high-quality short-term bonds. These bonds may provide more interest / yield than a savings account, but these bonds will fluctuate more in value compared to savings accounts. Certain high-quality short-term bonds (particularly municipal bonds) may be exempt from federal, state, and / or local taxes.

For many people, the easiest way to invest in high-quality short-term bonds is via a well-diversified low-cost ETF or mutual fund.

Short-Term Treasury Inflation Protected Securities (TIPS)

TIPS are offered by the US government to protect against inflation. The principal increases with inflation and decreases with deflation, as measured by the Consumer Price Index.[6] When it matures, you are paid the adjusted principal or original principal, whichever is greater. While TIPS are subject to federal income taxes, they are typically exempt from state and local taxes. Particularly if TIPS are in high demand, then investors may earn less than the rate of inflation.[6]

While you can buy short-term TIPS directly from the US government via the TreasuryDirect website, many people find it easiest to invest in TIPS via a well-diversified low-cost ETF or mutual fund.

*Source:* *FRED*, as of October 01, 2021. The Consumer Price Index for All Urban Consumers: All Items (CPIAUCSL) is a measure of the average monthly change in the price for goods and services paid by urban consumers between any two time periods. It can also represent the buying habits of urban consumers.

Series I Savings Bonds

Series I savings bonds are 30-year savings bonds offered to US residents by the US government, designed to match the US inflation rate.[7] Each individual can buy up to $10,000 of Series I savings bonds per year, and you can buy in increments of $25. You are restricted from selling your Series I savings bond within the first year, but after that you can redeem directly with the US government. If you sell within the first five years, you forfeit three months' worth of interest. When a Series I savings bond matures, you are paid the adjusted principal or original principal, whichever is greater. Series I savings bonds are subject to federal income taxes, but they are typically exempt from state and local taxes.[7]

You can buy Series I Savings Bond online directly from the US government via the TreasuryDirect website.

Conclusion

We can’t predict the future, but we can prepare for it. Particularly when times are toughest, that is when emergency savings can provide the most security for you. Emergency savings can help you weather the toughest times, providing a cushion so that you can stay committed to your financial plan for the long-term.

The idea of emergency savings is not new. The legendary investor Warren Buffett routinely talks about the importance of holding a large cash reserve for his company, largely driven by the teachings from his grandfather Ernest Buffett.[8] Below is a letter from Ernest Buffett to his family on the benefits of a cash reserve. [8] We hope you enjoy this, and as always feel free to reach out to us at SJS if you have any questions about emergency savings.

*Source: “Berkshire Hathaway 2010 Shareholder Letter“. Warren Buffett, 2011,* *berkshirehathaway.com*.

Important Disclosure Information & Sources:

[1] “Survey: More than half of Americans couldn’t cover three months of expenses with an emergency fund“. Sarah Foster, 21-Jul-2021, bankrate.com.

[2] “Cash is King: Flows, Balances, and Buffer Days: Evidence from 600,000 Small Businesses”. JPMorgan Chase & Co. Institute, September 2016, jpmorganchase.com.

[3] Your Money & Your Brain. Jason Zweig, 2008, Simon & Schuster.

[4] “Deposit Insurance FAQs.“ Federal Deposit Insurance Corporation, fdic.gov.

[5] “8 Best High-Yield Online Savings Accounts of November 2021“. Margarette Burnette, 01-Nov-2021, nerdwallet.com.

[6] “Treasury Inflation-Protected Securities (TIPS)“. U.S. Department of the Treasury, treasurydirect.gov.

[7] “Series I Savings Bonds“. U.S. Department of the Treasury, treasurydirect.gov.

[8] “Berkshire Hathaway 2010 Shareholder Letter“. Warren Buffett, 2011, berkshirehathaway.com.

Statements contained in this article that are not statements of historical fact are intended to be and are forward looking statements. All forward looking statements are inherently uncertain as they are based on various expectations and assumptions concerning future events and they are subject to numerous known and unknown risks and uncertainties which could cause actual events or results to differ materially from those projected.

Hyperlinks to third-party information are provided as a convenience and we disclaim any responsibility for information, services or products found on websites or other information linked hereto.

2022 IRS Changes - Retirement Plans and Social Security

To help you plan for 2022, we provide this information regarding limits, thresholds, and changes for retirement plans and Social Security.

By Senior Advisor Andrew Schaetzke, CFP®.

Every year, the Internal Revenue Service (IRS) updates dollar contribution limits and other aspects of defined contribution plans like 401(k)s, tax-qualified defined benefit plans, and Social Security. Particularly with the rise in inflation this year, some of the dollar limits have gone up significantly more than in years past.[1][2]

To help you plan for 2022, we provide the below information regarding limits, thresholds, and changes for these retirement plans and Social Security.[1][3] Additionally, we are actively monitoring other legislation making its way through Congress, particularly relating to President Biden’s Build Back Better Framework.[4] As legislative bills become law, we will provide you with more important updates.

401(k), 403(b), 457(b), ESOP, Profit-Sharing Plans

Traditional IRA / Roth IRA

Defined Benefits Plan

Social Security

Estate and Gift Taxes

Important Disclosure Information & Sources:

[1] “2022 Limitations Adjusted as Provided in Section 415(d), etc.“. IRS, irs.gov.

[2] “Consumer Price Index for All Urban Consumers: All Items in U.S. City Average“. Federal Reserve Bank of St. Louis, stlouisfed.org.

[3] “2022 IRS Plan Limits“. Newport Group, 04-Nov-2021, newportgroup.com.

[4] “The Build Back Better Framework“. The White House, whitehouse.gov.

Hyperlinks to third-party information are provided as a convenience and we disclaim any responsibility for information, services or products found on websites or other information linked hereto.

6 Tax-Saving Strategies For You And Your Portfolio

For taxable investors, the following strategies may help you save money on taxes without lowering your potential investment returns.

By Senior Advisor Andrew Schaetzke, CFP® and Investment Associate Bobby Adusumilli, CFA.

Why do you invest?

Each of us has our own goals for investing. For some, we want to support our families. For others, we want to donate to charitable causes. For business owners, you want to successfully grow your business over time.

If along the way we can legally save on taxes, then all the better. All else equal, lower taxes leave us with more money to achieve our specific goals.

For taxable investors, the following strategies may help you save money on taxes without lowering your potential investment returns. As always, please consult with your tax advisor as well as other advisors before implementing these strategies.

Use Tax-Efficient Investments

Taxes are only one of the criteria that investors consider when designing their portfolios. Yet there are usually multiple investment options to choose from in whatever area you want to invest in. Particularly for mutual fund and ETF investors, when choosing between multiple investment options, the below considerations may help you save money on expected taxes without sacrificing expected return.

Invest in lower turnover mutual funds / ETFs: Because they sell less of their holdings on an annual basis, mutual funds / ETFs with lower turnover typically realize less net capital gains than mutual funds / ETFs with higher turnover, and thus are likely to pay less capital gains distributions each year.[1]
Invest in tax-sensitive mutual funds / ETFs: Some investment managers actively consider tax consequences when making investment decisions, such as selling higher cost basis positions for a particular investment or selling a comparable investment with a higher cost basis. By choosing a tax-sensitive mutual fund / ETF, you may lower your annual capital gains distributions.
Consider ETFs: Because of their structure, ETFs are typically less likely to pay capital gains distributions than similar mutual funds.[2] Therefore, ETFs are becoming an increasingly popular choice for taxable investors.[3] However, particularly for larger investors as well as lower-AUM ETFs, ETFs may not outperform similar tax-sensitive mutual funds after taxes and fees, so it is important to choose the right investment for your specific situation.

Invest Via Tax-Advantaged Accounts

There are three general types of tax-advantaged accounts:

Tax-deferred: Money you contribute to the account is not taxed, but money you withdraw in the future is subject to taxes. Examples include Traditional IRAs, Traditional 401(k)s, Traditional 403(b)s, and 457 plans.
Tax-exempt: Money you contribute to the account is taxed, but money you withdraw in the future is not subject to taxes (subject to specific rules). Examples include Roth IRAs, Roth 401(k)s, Roth 403(b)s, and 529 plans.
Tax-free: Money you contribute as well as withdraw from the account is not subject to taxes, so long as the money is used for specific purposes. While these accounts are rare, a popular tax-free account is a Health Savings Account (HSA).

All of the above tax-advantaged accounts allow investing the balances. Additionally, if you already have a Traditional IRA, Traditional 401(k), or a Traditional 403(b), you may be able to convert some or all of the account balances to a Roth account - known as a Roth conversion.[4]

Depending on your employment, income, and age, you may be able to use some combination of these tax-advantaged accounts to help you save on taxes over time.

Asset Location

If you have a combination of taxable and tax-advantaged accounts, you could invest your most tax-inefficient investments within your tax-advantaged accounts. Once you decide which tax-inefficient investments you want in your tax-advantaged accounts, you could place your highest expected-return investments into your tax-free and tax-exempt accounts, and place your lower expected-return investments in your tax-deferred accounts.

Figuring out how to rank your investments based on tax-efficiency is complicated, and is highly dependent on your income, net worth, and age. For more comprehensive information on asset location, you can check out this webpage.[5]

Tax Loss Harvesting

Within taxable accounts, if you realize a net loss on an investment position, you are able to use that net loss amount to offset any current or future realized capital gains (subject to the wash-sale rule).[6] Additionally, if you have extra net capital losses at the end of the year, you may be able to offset up to $3,000 in federal income for this and potentially future years.[6] However, it’s important to emphasize that tax loss harvesting involves tax deferral, not tax avoidance.

If you want to learn more about tax loss harvesting, you can read our article on harvested losses.

Analyze Your Withdrawal Order

If you have a mix of taxable and tax-advantaged investment accounts, then you are subject to various withdrawal limitations and tax consequences. If you are able to selectively withdraw from each of these accounts over time, you may be able to pay lower your taxes in the short-term while allowing more time for your investments to grow.

Some general rules you can consider for how to generate cash from your investments:

First use the distributions - dividends, interest income, capital gains distributions - from your taxable accounts.
If you are age 72 or older, use the required minimum distributions (RMDs) from your relevant tax-advantaged accounts.
Within taxable accounts, sell positions that are subject to long-term capital gains taxes.
Within the taxable accounts, sell positions with higher cost bases.

Gifting and Charitable Donations

The ultimate goal of saving on taxes is to have money to accomplish our goals. Particularly for those who are inclined to gift money to your family or donate to charitable institutions, the below options may decrease your taxes over time.

For each member of your family, you may gift them up to $15,000 per year, via cash or investments.[8] Particularly if a family member has a lower tax bracket than you, it may be advantageous for you to gift a low cost basis investment, which could help decrease future taxes paid on that holding. For more information, you can read our article on gifting.
From your taxable accounts, you can donate cash or investments directly to a charitable institution. This can help you save on future taxes, up to federal deduction limits.[9]
As long as you are age 72 and meet the specific IRS rules, you can donate up to $100,000 annually directly from your Traditional IRA (without paying taxes) to a qualified charity through a qualified charitable distribution.[10]

Conclusion

While each of the above strategies may help, combining some or all of these strategies could significantly improve your investment portfolio over time, leaving you with more money to accomplish your goals. As always, please consult with your tax advisor as well as other advisors before implementing these strategies. If you have any questions on how you can incorporate the above strategies in your portfolio, feel free to reach out to us.

Important Disclosure Information & Sources:

[1] “Turnover Definition“. Will Kenton, 14-Jul-2020, investopedia.com.

[2] “Do ETFs Generate Capital Gains for Shareholders?“ Andriy Blokhin, 23-Sep-2021, investopedia.com.

[3] “The Future of ETFs“. Irene Huhulea, 23-Aug-2021, investopedia.com.

[4] “Roth IRA Conversion“. Julia Kagan, 23-May-2021, investopedia.com.

[5] “Tax-efficient fund placement“. Bogleheads, bogleheads.org.

[6] “Topic No. 409 Capital Gains and Losses“. IRS, irs.gov.

[7] “6 tax-saving strategies for smart investors“. Jessica McBride, 18-Feb-2021, vanguard.com.

[8] “Frequently Asked Questions on Gift Taxes“. IRS, irs.gov.

[9] “Charitable Contribution Deductions“. IRS, irs.gov.

[10] “IRA FAQs - Distributions (Withdrawals)“. IRS, irs.gov.

Hyperlinks to third-party information are provided as a convenience and we disclaim any responsibility for information, services or products found on websites or other information linked hereto.

What Should You Consider When Moving Out Of State?

To help you figure out what issues to consider if you move out of state, we provide this resource.

By SJS Investment Services Senior Advisor Andrew Schaetzke, CFP®.

Especially since the start of the pandemic, many people have moved in order to live in a less expensive place, to have more space, or to have different pace of life.[1] Moving can be exciting, as it may allow you to experience something new. At the same time, there a lot of logistical details to account for when you move. Particularly if you move out of state, it can be easy to forget or not even know that you have to do something important.

To help you figure out what issues to consider if you move out of state, we provide the below resource. From this, you may come away with answers and action items for the following:

Do I need to distinguish between residency and domicile?
What agencies do I communicate with in order to update records?
Do I need to update my family’s estate planning documents?
Are there potential tax advantages or additional expenses (such as for Medicare) that I should be aware of?
If I move because of a job, are my moving expenses tax-deductible?

As always, we are here to help you evaluate your personal situation and help you figure out what you need to do when moving out of state. Please feel free to reach out to us if you have any questions.

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Important Disclosure Information & Sources:

[1] “Americans Up and Moved During the Pandemic. Here’s Where They Went.“ Yan Wu & Luis Melgar, 11-May-2021, wsj.com.

Hyperlinks to third-party information are provided as a convenience and we disclaim any responsibility for information, services or products found on websites or other information linked hereto.

What Accounts Should You Consider If You Want To Save More?

To help you figure out what accounts to use if you want to save more, we provide this resource.

By SJS Investment Services Senior Advisor Andrew Schaetzke, CFP®.

Having the money to save more can be a welcome and exciting feeling, allowing you to better prepare for your future while also feeling more confident in the present. You can save for your family, retirement, unexpected expenses, or many other causes important to you. At the same time, figuring out how to save can also be confusing, as there are a lot of options to choose from.

The good news is that once you figure out what you want to save for, there are usually a few accounts / options that are most beneficial for your situation, that can help you save on taxes and expenses. Additionally, by knowing some of the accounts ahead of time, you may better handle the situation if you do ever find yourself with more money to save.

To help you figure out what accounts to use if you want to save more, we provide the below resource. From this, you may come away with answers and action items for the following:

What retirement accounts should I prioritize, for anyone ranging from a young investor to a mid-career professional to a business owner?
How should I save for future healthcare expenses?
How should I save for my child’s future education?
Would an annuity or life insurance help me save more for retirement?
How much should I save in an emergency account for myself and my family?

As always, we are here to help you evaluate your personal situation and help you figure out what accounts may be best for you. Please feel free to reach out to us if you have any questions.

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Important Disclosure Information & Sources:

Advisory services are provided by SJS Investment Services, a registered investment advisor with the SEC. Registration does not imply a certain level of skill or training. SJS Investment Services does not provide tax advice. Please consult your tax professional for specific advice. This material has been prepared for informational purposes only.

Hyperlinks to third-party information are provided as a convenience and we disclaim any responsibility for information, services or products found on websites or other information linked hereto.

What Should You Consider If You Suddenly Receive Wealth?

To identify some considerations that may arise if you suddenly receive a large amount of wealth, we offer this guide.

By SJS Investment Services Senior Advisor Andrew Schaetzke, CFP®.

Suddenly receiving wealth can be life-changing, allowing you to make purchases or investments, pay down debts, and / or give you more financial freedom to accomplish your goals and dreams. At the same time, receiving a large amount of wealth can also complicate your life - financially, psychologically, and relationship-wise.

The good news is that you don’t have to figure out everything on your own. There are many good people and resources available that can help answer your questions and offer you guidance. By knowing some of the issues ahead of time, you may better handle the situation if you do ever find yourself with a lot more wealth.

To identify some considerations that may arise if you suddenly receive a large amount of wealth, we offer the guide below. From this, you may come away with answers and action items for the following:

How may surplus wealth impact my spending habits and annual cash flow?
What tax considerations should I be aware of?
Should I pay off or restructure certain debts, such as student loans, mortgages, family loans, etc.?
What long-term planning issues should I consider, such as philanthropy, gifting, retirement changes, etc.?

As always, we are here to help you evaluate your personal situation and help you better handle the present while also planning for the future. Please feel free to reach out to us if you have any questions.

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Important Disclosure Information & Sources:

Advisory services are provided by SJS Investment Services, a registered investment advisor with the SEC. Registration does not imply a certain level of skill or training. SJS Investment Services does not provide tax advice. Please consult your tax professional for specific advice. This material has been prepared for informational purposes only.

Hyperlinks to third-party information are provided as a convenience and we disclaim any responsibility for information, services or products found on websites or other information linked hereto.

What Should You Consider When Reviewing Your Investments?

To help you figure out what to consider when reviewing your investment plan, we provide this resource.

By SJS Investment Services Senior Advisor Andrew Schaetzke, CFP®.

Like most people, your financial situation will probably change significantly over time, whether due to new family members, new career, new expenses, additional assets, or various other changes. As your financial situation and financial goals change, your investment plan also probably needs to change in order to reach your financial goals. We find that people with well-thought-out investment plans are more likely to accomplish their financial goals than people who don’t create a plan.

To help you figure out what to consider when reviewing your investment plan, we provide the below resource. From this resource, you may come away with answers and action items for the following:

Do the goals, time horizon, and objectives of your investment portfolio need to be reviewed, updated, or documented? Do you need to create or update your written investment strategy and plan?
Do you need to review your risk tolerance or asset allocation?
Do you need to open a new account specifically tied to an investment objective, or consolidate existing accounts?
Are you trying to minimize your tax liability? If so, what are some ways to potentially decrease your tax liability?

As always, we are here to help you analyze your personal situation and help you plan for your future. Please feel free to reach out to us if you have any questions.

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Important Disclosure Information & Sources:

Advisory services are provided by SJS Investment Services, a registered investment advisor with the SEC. Registration does not imply a certain level of skill or training. SJS Investment Services does not provide tax advice. Please consult your tax professional for specific advice. This material has been prepared for informational purposes only.

Hyperlinks to third-party information are provided as a convenience and we disclaim any responsibility for information, services or products found on websites or other information linked hereto.

How To Save More Money

We provide this resource to help you determine ways to save and invest more in tax-efficient ways.

By SJS Investment Services Senior Advisor Andrew Schaetzke, CFP®.

Over the past year, global stock markets have provided some of their best returns in recent history.[1] As a result, many investors have more savings than ever before. Particularly with potential upcoming changes to the U.S. tax code, many investors are asking how can they save and invest more in tax-efficient ways.[2] We provide the below resource to help you determine ways to save and invest more in tax-efficient ways. As always, please consult your tax professional for specific advice.

From this checklist, you may come away with answers to the following:

Do I need to save more in your Emergency Fund? If so, how should I invest my Emergency Fund?
For healthcare savings, how much can I contribute to a Flexible Savings Account (FSA) and / or Health Savings Account (HSA)?
How much can I save in the retirement plan offered by my employer?
If I exceed income limits, how can I invest in Roth accounts?
As a business owner, what additional savings options do I have?
How can I help my children save more for their future (ex. education savings account, trust account, etc.)?
Should I consider an annuity or additional life insurance?
What accounts can I use for tax-efficient charitable giving?

As always, we are here to help you analyze your personal situation and help you plan for your future. Please feel free to reach out to us if you have any questions.

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Important Disclosure Information & Sources:

[1] “Benchmark Returns“. Vanguard, 30-Apr-2020, investor.vanguard.com.

[2] “Biden Will Seek Tax Increase on Rich to Fund Child Care and Education“. Jim Tankersley, 22-Apr-2021, nytimes.com.

Advisory services are provided by SJS Investment Services, a registered investment advisor with the SEC. Registration does not imply a certain level of skill or training. SJS Investment Services does not provide tax advice. Please consult your tax professional for specific advice. This material has been prepared for informational purposes only.

Hyperlinks to third-party information are provided as a convenience and we disclaim any responsibility for information, services or products found on websites or other information linked hereto.

How Would President Biden's Tax Plan Impact Your Finances?

President Biden’s administration recently released details of a proposed tax plan. To help you determine how the proposed tax plan may impact your finances, we provide these resources.

By SJS Investment Services Senior Advisor Andrew Schaetzke, CFP®.

As you might have heard, President Biden’s administration recently released details of a new proposed tax plan, to potentially go into effect starting in 2022 pending congressional negotiations and approval.[1] To help you determine how this proposed tax plan may impact your finances, we provide the below resources to help simplify the changes and address your questions. As always, please consult your tax professional for specific advice.

From this checklist you may come away with answers to the following:

How may federal income taxes, Social Security taxes, capital gains taxes, estate taxes, and corporate taxes change?
Will tax deductions for traditional retirement accounts (e.g., 401(k) & IRA) change?
Are there additional tax credits for small business owners?
How will the Child and Dependent Care Tax Credits change?
Will the step-up rule for inherited assets change?
Will first-time homebuyers receive a federal tax credit?

As always, we are here to help you analyze your personal situation and help you plan for your future. Please feel free to reach out to us if you have any questions.

How Might President Biden’s Tax Plan Affect Me?

As A High-Income Taxpayer, How Might President Biden’s Tax Plan Affect Me?

Important Disclosure Information & Sources:

[1] “Biden Will Seek Tax Increase on Rich to Fund Child Care and Education“. Jim Tankersley, 22-Apr-2021, nytimes.com.

Advisory services are provided by SJS Investment Services, a registered investment advisor with the SEC. Registration does not imply a certain level of skill or training. SJS Investment Services does not provide tax advice. Please consult your tax professional for specific advice. This material has been prepared for informational purposes only.

Hyperlinks to third-party information are provided as a convenience and we disclaim any responsibility for information, services or products found on websites or other information linked hereto.

Should You Convert Your IRA To A Roth IRA?

Depending on individual circumstances, some people consider converting their Traditional IRA to a Roth IRA in an effort to increase longer-term after-tax returns.

By SJS Investment Services Senior Advisor Andrew Schaetzke, CFP®.

Taxes may be one of your most important considerations in the design and implementation of your investment strategy. We want to help you increase after-tax returns, subject to your particular investment plan.

When you have some combination of taxable, tax-deferred, and tax-exempt investment accounts, assuming the same investments, we expect your after-tax returns to be higher for tax-advantaged (tax-deferred and tax-exempt) accounts compared to taxable accounts.

One specific tax-advantaged account - the Individual Retirement Account (IRA) - has an important feature that can potentially help you increase your after-tax expected returns over time.

Individual Retirement Accounts (IRAs): Traditional IRA Vs. Roth IRA

An IRA is meant to help people save for retirement in a tax-efficient way. There are two types of IRAs:[1]

Traditional IRA: As long as your taxable income (MAGI) is not above the Traditional IRA deduction limit, the money you put into the account is not taxed and may be deducted from your income up to $6,000 in 2021 ($7,000 if over age 50). When you withdraw money from the account at a later date, it is taxed at ordinary income tax rates.
Roth IRA: As long as your taxable income (MAGI) is lower than the Roth IRA income limit, the money you put into the account is taxed now with no deduction. The money taken out of the account at a later date after age 59 1/2 is not taxed at all.

For a more thorough explanation of Traditional IRAs and Roth IRAs, please see this IRS website.

Converting A Traditional IRA To A Roth IRA

Depending on your individual circumstances, you may consider converting your Traditional IRA to a Roth IRA in an effort to increase your longer-term after-tax expected returns. As part of the process, you have to pay federal & state income taxes now on the amount of money that you convert. There are many reasons you may consider converting to a Roth IRA, including:

More tax-free withdrawals in retirement
Watch your money potentially grow tax-free longer
Decreasing future tax burden for beneficiaries of your Traditional IRA

You may be a good candidate for a conversion if:

You are paying lower federal & state income tax rates now compared to expected taxes in the future.
You have lower taxable income this year compared to expected future years.
You want to lower the required minimum distributions (RMDs) from the Traditional IRA.
You are interested in lowering your Medicare IRMAA surcharges by decreasing future taxable income (MAGI).
You want to feel more in control of your future tax burden.

For more information on IRA conversions, please see this IRS website.

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Risks of Converting A Traditional IRA To A Roth IRA

Rolling over a significant balance to a Roth IRA could put you into a higher income tax bracket and leave you with a bigger tax bill this year. If tax rates decrease in the future, you may end up paying more taxes by converting now relative to in the future. The regulatory rules and income limits surrounding conversions can be complex, and it is easy to make mistakes during the conversion process, which may complicate filing your taxes, potentially lead to the 10% penalty, and could lead to an IRS audit. Assets converted to a Roth IRA must be held in the Roth IRA for at least five years before withdrawing in order to avoid a 10% penalty. Depending on your conversion method, you may not be invested during the conversion period. Additionally, the conversion may cause you unnecessary stress.

Summary

Converting a Traditional IRA to a Roth IRA is highly dependent on your unique circumstances. SJS can help you review your current situations, and analyze the benefits and tradeoffs of conversions. As always, please work with your tax advisor to appropriately complete any IRA conversion and associated paperwork.

IRA conversions are just one of the many ways that SJS helps people potentially increase their after-tax expected returns over time. If you want to learn more about other ways and how SJS may be able to help you, please feel free to reach out to us.

Important Disclosure Information And Sources:

[1] “Traditional and Roth IRAs“. IRS, irs.gov.

[2] “IRA FAQs - Rollovers and Roth Conversions“. IRS, irs.gov.

Advisory services are provided by SJS Investment Services, a registered investment advisor with the SEC. Registration does not imply a certain level of skill or training. SJS Investment Services does not provide legal or tax advice. Please consult your legal or tax professionals for specific advice. This material has been prepared for informational purposes only.

Statements contained in this post that are not statements of historical fact are intended to be and are forward looking statements. Forward looking statements include expressed expectations of future events and the assumptions on which the expressed expectations are based. All forward looking statements are inherently uncertain as they are based on various expectations and assumptions concerning future events and they are subject to numerous known and unknown risks and uncertainties which could cause actual events or results to differ materially from those projected.

Hyperlinks to third-party information are provided as a convenience and we disclaim any responsibility for information, services or products found on websites or other information linked hereto.

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How much should I save for emergency savings?

How quickly should I fund my emergency savings?

When should I use my emergency savings?

Where should I keep my emergency savings?

Savings Account

High-Quality Short-Term Bonds

Short-Term Treasury Inflation Protected Securities (TIPS)

Series I Savings Bonds

Conclusion

Suggested Reading

401(k), 403(b), 457(b), ESOP, Profit-Sharing Plans

Traditional IRA / Roth IRA

Defined Benefits Plan

Social Security

Estate and Gift Taxes

Suggested Reading

Use Tax-Efficient Investments

Invest Via Tax-Advantaged Accounts

Asset Location

Tax Loss Harvesting

Analyze Your Withdrawal Order

Gifting and Charitable Donations

Conclusion

Suggested Reading

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How Might President Biden’s Tax Plan Affect Me?

As A High-Income Taxpayer, How Might President Biden’s Tax Plan Affect Me?

Suggested Reading

Individual Retirement Accounts (IRAs): Traditional IRA Vs. Roth IRA

Converting A Traditional IRA To A Roth IRA

Risks of Converting A Traditional IRA To A Roth IRA

Summary

Suggested Reading

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