We walked through the financial plan for a client this week with a $10m+ portfolio nearing retirement.

While he’s still working, we’re doing a few powerful things:

• Avoiding capital gains tax on $1m sale of appreciated real estate with the tax-loss harvesting from a tax-aware long/short SMA
• Reducing income taxes with ordinary deductions from tax-aware hedge fund exposure

That should save over $500k in taxes this year, but it’s nothing compared to what’s coming.

Retirement is when we crank things up a notch.

With $5m in pre-tax accounts (401k, IRA, cash balance plan) the game is on converting as much of that to Roth as we can tax efficiently.

We expect ~ $600k of ordinary deductions each year from the tax-aware hedge funds, which allows us to convert large amounts into his Roth each year… without getting crushed on taxes.

The result:

• Avoid the RMD trap that forces you into higher tax brackets later in life
• Create a tax-free pool of capital for large purchases (no tax consequences)
• Transfer significantly more wealth to the next generation (with another 10 years of tax-free growth for heirs)

When you integrate tax-aware investing with financial planning, you’re not just optimizing returns…

You’re changing the trajectory of your family’s wealth for generations.