Michael adjusts his portfolio annually but is anxious that selling assets to rebalance could result in capital gains taxes, negating the advantages of reallocating. Is there a more effective method?
Sam is considering a job change but is uncertain how an Employee Stock Ownership Plan compares to her current employer's 401(k). Is the offer she's received advantageous?
Carlos is looking forward to retiring early in Brazil but has concerns about the tax consequences for his retirement accounts based in the U.S. How should he prepare for this transition?
Former financial planner Joe Saul-Sehy and I address these inquiries in today’s episode.
Enjoy!
P.S. If you have a question, feel free to leave it here.
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Michael inquires (at 02:03 minutes): For my financial plan, I rebalance my portfolio annually—on my birthday, as a convenient time. However, I’m curious about the optimal way to rebalance in my taxable brokerage account.
If I sell assets to rebalance, I incur capital gains, which have tax repercussions while I'm still employed. The main aim of my taxable account is to invest extra funds that I don’t need right away, allowing it to grow until I have a necessity for it.
Currently, I rebalance by allocating new contributions to underrepresented assets to align my allocation with my target. Still, I'm uncertain if there's a more effective strategy. How can I create a successful rebalancing plan?
Sam asks (at 10:43 minutes): What are the advantages and disadvantages of an Employee Stock Ownership Plan (ESOP) versus a traditional 401(k)?
I received a job offer from a company that lacks a 401(k) but features an ESOP. They can't assure contributions but have consistently contributed the maximum annual percentage—13.5 percent—for the last six years.
At my current workplace, I benefit from a five percent 401(k) match, so this appears to be an improvement. The company providing the ESOP has been established for 75 years and has performed well, particularly over the last decade.
There's considerable potential for growth, yet I'm aware of the risk involved since all contributions are directed into company stock. How should I assess this opportunity?
Carlos asks (at 38:00 minutes): I don’t entirely agree with your perspective on traditional versus Roth contributions because, in reality, it’s rare to make post-tax contributions that match pre-tax amounts. Naturally, the impact of post-tax contributions on your paycheck is significantly greater, and you certainly feel that.
That said, I would appreciate your insights regarding my situation.
I’ve been living in the U.S. for a decade as a green card holder, earning a good income. I’ve maximized my traditional 401(k) and Roth IRA contributions while also funding a taxable brokerage account as much as I can.
In about five years, I'd like to retire early and move back to my home country of Brazil, which doesn't have a tax treaty with the U.S. What should I anticipate in terms of taxation and withdrawals from my accounts once I relocate there?
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Michael adjusts his portfolio annually. However, he is concerned that realizing capital gains taxes on his brokerage account might negate the advantages of reallocation. Is there a more effective strategy?
