Tax Planning

The impact of taxes cannot be overstated in the context of financial planning.  Tax laws are complicated, ever changing, and can have a significant impact on your finances.

Tax planning is the analysis and actions taken in a financial plan as a result of the expected impact of taxes.  The goal of tax planning is to maximize the long-term after-tax results of a given financial plan.

At CB Capital, we integrate tax planning strategies into all of our comprehensive financial plans that we develop for clients.  This is accomplished through the use of several different tools and strategies.

Some examples include:

Roth IRA vs Trad IRA on chalkboard


For the same reason it is prudent to manage your exposure to risk with portfolio diversification, it is also prudent to manage your exposure to taxes with tax diversification.

Tax diversification is a strategy that allocates the total dollar value investments among the three (3) different account types: taxable, tax-deferred, and tax free. It creates more flexibility in managing current and future taxes, and, in most cases, will lower your total tax liabilities.

One example of a tool used to accomplish this goal is a Roth conversion. It is utilized to move assets from a tax-deferred account (where most people have the majority of their retirement assets) to a tax free Roth IRA account.

Conversions are typically done over time as part of a larger strategy. To determine the specific timing and amounts, CB Capital will calculate the optimal conversion strategy based on your current and projected tax brackets, future required minimum distributions (RMDs), and other factors.


The easiest way to explain asset location is to compare it to tax diverisification. With tax diverisification, we determine the dollar values that should be divided among the three (3) different types of accounts mentioned above both now and in the future. With asset location, we determine what specific securities should be in the three (3) different types of accounts. This is important because securities such as bonds, dividend paying stocks, and high growth stocks have different growth and income characteristics which in turn will impact current and future taxes.

This strategy often results in varied asset allocations among a client’s different accounts. However, the overall strategic asset allocation is maintained for all the client’s accounts as a whole. The result will be to minimize current and future tax liabilities and increase after-tax returns.


Normal market volatility can create temporary losses within a portfolio. Tax loss harvesting is a strategy used in taxable accounts to capitalize on these inevitable losses and turn them into profit opportunities.

Current tax law allows for capital losses to be offset against capital gains and in some cases against ordinary income. In practice, we will sell a security that has a loss, thereby “harvesting” or capturing the tax loss. At the same time, we will purchase a security that is highly correlated with (moves with) the security that we sold and that also avoids a “wash-sale” exclusion. This strategy lowers your tax liability while at the same time rebalancing your portfolio and/or positioning it to capture the upside recovery in the market.


Many individuals simply donate cash to support their favorite charities. However, there are several strategies that we utilize to help clients fulfill their charitable goals in more tax conscious ways. As with all tax strategies, any application will depend on an individual’s specific situation and goals, however listed below are some examples of the strategies we utilize for clients.

Donating securities directly:
• If an individual holds highly appreciated securities, they may be able to achieve a double tax benefit by donating the securities directly to a qualified charity as opposed to selling the securities and then donating the cash. For securities held in a taxable account for more than one year, individuals may deduct up to 30% of their adjusted gross income (AGI)* and avoid the capital gains tax that would have been owed from selling the security and then donating the cash. An additional benefit of this strategy is that it can be used as a tax efficient way to rebalance a portfolio that may have gotten out of balance due to the growth of one position.
*Assuming they itemize deductions

Bunching donations:

• Bunching donations is a strategy that has become more popular since the passage of the Tax Cuts and Jobs Act of 2017 which resulted in an increase to the standard deduction. Instead of making smaller charitable contributions spread over several years, we will “bunch” several year’s worth of contributions into a single year. This allows the client to itemize their deductions (and claim the charitable deduction) that year, and then claim the standard deduction in subsequent years.

Donor Advised Fund (DAF)

• A DAF is an account that allows an individual to make a tax deductible contribution in a given year (assuming they itemize deductions), but also allows the funds to be held in the account and invested until a later date when the donation will be made. This can be helpful if an individual wants to make an impact with a larger single donation in the future or if they have not yet identified a charity or cause they would like to support. Contributions to DAFs can be in the form of cash, appreciated securities, or other assets. Also DAFs can be helpful in donating appreciated securities. For example, in some cases charities do not accept appreciated securities as a donation. Instead the securities can be donated to a DAF capturing the deduction (assuming they were held for over one year). Once in the DAF, the securities are sold and the cash is then donated to the charity. As an additional estate planning bebefit, any contributions to a DAF are irrevocable and therefore are out of in an individual’s estate.

Qualified Charitable Distribution (QCD)

• A QCD is a distribution from a Traditional IRA directly to a qualified charity. The amount permitted is up to $100,000/year for individuals who are 70½ years old or older. QCDs can be counted towards satisfying their required minimum distributions (RMDs) for the year if certain rules are met.
• In addition, the amount donated through a QCD is excluded from taxable income, which is not the case with regular withdrawals from a Traditional IRA. Lowering taxable income may benefit the impact to certain tax credits and deductions, including Social Security and Medicare.
• Also, QCDs do not require you to itemize, which means that individuals can perform a QCD and still take advantage of the higher standard deduction allowed by the passage of the Tax Cuts and Jobs Act in 2017.


We work with clients to determine the most effective way to save for future college expenses. There are several options, but one of the more effective options is a 529 plan. A 529 plan is a state sponsored tax-advantaged account designed to encourage saving for education expenses. All states sponsor at least one 529 plan and individuals may invest in any state’s plan. Much like a Roth IRA, contributions to a 529 plan are after-tax, meaning they are not deductible from federal income taxes. However, many states offer state income tax deductions or tax credits for residents who invest in the 529 plan of their home state. Earnings in a 529 plan accumulate on a tax-deferred basis and distributions are not taxed federally when used for qualified education expenses. With the passage of the Tax Cuts and Jobs Act of 2017, up to $10,000 per year, per beneficiary is allowed to pay for qualified K–12 and post-secondary education expenses. The SECURE Act of 2019 allows tax-free distributions for student loan repayments up to $10,000 per borrower (lifetime limit) for the beneficiary and the beneficiary’s siblings.

While this serves as a 529 plan summary, there are additional plan features and factors to consider before deciding to proceed with a 529 plan.



• Individuals can take advantage of the benefits of contributing to tax deferred accounts such as IRAs, 401ks, 403bs, or Thrift Savings Plans (TSPs). These accounts offer an upfront tax deduction and tax deferred growth. Alternatively, the Roth version of these accounts tradeoff the upfront tax deduction for tax free growth and withdrawals (subject to certain rules). Both options are powerful tools that we utilize when designing financial plans for clients.

Business owners:

• There are additional retirement plan options and features available that benefit business owners. We work with our business owner clients to design, implement, and support tax advantaged company retirement plans that are tailored to meet their needs now and in the future. Please see the company retirement plans section of this site for more detail. (please make “company retirement plans” a live link to the section)

Business owners with no employees and independent contractors:

• For business owners with no employees or independent contractors such as consultants, key-note speakers, doctors, attorneys, or other professionals, there is a unique opportunity. We work with these individuals to set up and manage an option called a Solo 401k plan. This plan offers incredible opportunity and flexibility. It allows for both employer and employee contributions, meaning contributions can be made up to the maximum 415(c) limits for both the owner and their spouse (assuming the profits support the contributions). This option is particularly powerful for clients with a “day job” and a “side business”. The reason is due to the little known but important fact that the 415(c) limits on contributions are per plan and not per person. This means that an individual can contribute up the 415(c) limits for both their day job and their side business separately. This allows for very significant retirement savings beyond what is typically available.

Individuals with high deductible health plans:

• Individuals enrolled in a high deductible health plan (HDHP) may be eligible to contribute to a Health Savings Account (HSA). An HSA is a tax advantaged account that allows individuals and families to save for future qualified medical expenses. It is the only triple tax advantaged account available, meaning that contributions are tax deductible (even if you claim the standard deduction), grow tax deferred, and distributions are tax free if used on qualified medical expenses. HSA contributions can be used to pay for current qualified medical expenses or invested (like an IRA) to pay for future qualified medical expenses. There is an additional strategy that allows an HSA to be used as a “Super” IRA. We work with clients to establish and manage their HSA accounts as part of a comprehensive financial plan.

The examples listed above reflect some of the many ways that we integrate tax planning into our comprehensive financial plans with clients. At CB Capital, we will work with the client’s CPA and Attorney as appropriate when implementing these types of strategies. If you would like to discuss your situation or inquire about working with the Firm, please complete and submit the “Let’s Talk” section below.