Tax Planning - Keeping More of What You Earn
10/08/2025
In this issue of Wealth Wisdom, we are continuing to discuss the principles that serve as the foundation for sound and strategic wealth management.
- Financial Planning – Mapping the Journey
- Investment Management – Growing with Intention
- Risk Management – Protecting the Engine
- Tax Planning – Keeping More of What You Earn
- Estate Planning – Handing over the wheel
- Relationship Management – Coordinating with Your Financial Team
Effective tax planning helps you optimize your financial decisions to minimize tax liabilities and increase after-tax returns. Whether it’s selecting tax-efficient investments, strategically planning income distributions in retirement, or managing capital gains, this principle ensures more of your wealth stays in your hands—and eventually, in the hands of your heirs.
Example from Nik Gumeson, First Federal Bank Wealth Management Advisor:
A customer came to us about a year and a half ago. He was semi-retired and wanted to know what to do with his prior employer’s 401(k). I went through his options, and he elected to roll into an IRA with Wealth Management. During our investment strategy meeting, I learned that the client was in a surprisingly lower tax bracket than I had anticipated. I suggested that we meet with his CPA to determine if periodic Roth conversions would make sense. (By paying tax on a portion of the IRA and moving the remaining portion into a Roth IRA, to experience tax-free growth).
Over the last year and a half, we have moved funds from his IRA into his Roth which worked out to create tax-free growth. We moved the most we could while staying within his current tax bracket. Once the client reaches 59.5 years old, he can draw from the Roth without having an income tax implication.
Next Wealth Wisdom, we'll dive into principal number five: Estate Planning.
Read all the Wealth Wisdom Articles
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