Strategic Tax Planning for Wealth Accumulation and Preservation

Key Quotes

"But taxes we have a set of rules and we can we can we can define our behavior based on those rules at least in the short term we don't know what tax law will look like 20 years from now but we have a set of rules for the foreseeable future we have to act within those rules but it gives us guidelines and that's where we can actually make a difference because we don't know what the market's going to do tomorrow next week next month next year but we do know what the tax code will look like at least until probably 2028"

Bill Artzerounian emphasizes that while market performance is unpredictable, tax laws provide a more stable framework. This allows investors to proactively manage their tax liabilities by understanding and acting within the existing rules, making a tangible difference in their financial outcomes.

"Asset allocation can be huge and and we're we're big fans of asset diversification and we come clients come to us they're well versed in in sorry asset diversification but not necessarily tax diversification tax diversification to me means you have different levels of assets in each of these buckets and that gives you a lot of flexibility when you need it"

Artzerounian explains that tax diversification, similar to asset diversification, involves holding assets across different tax treatments (pre-tax, after-tax, tax-free). This strategy provides investors with greater financial flexibility, particularly when accessing funds in the future.

"The extra 30k that i alluded to that goes in as a quote unquote after tax contribution when you convert after tax money you don't pay tax on it you don't pay tax twice that's kind of a foundation of the us tax code you don't pay tax twice"

Artzerounian clarifies the mechanics of the "mega backdoor Roth" conversion, stating that contributions made on an after-tax basis are not taxed again when converted to a Roth account. This principle of avoiding double taxation is a fundamental aspect of the U.S. tax system.

"we call that equity comp alphabet soup barry it's it's really confusing a lot of folks out in the bay area or in other tech companies they get employed by these companies they're like here's your package and they have no idea what it means so i think the first thing is just an understanding of of what you own and then an understanding of how it's taxed"

Artzerounian describes the complexity of equity compensation, referring to it as "alphabet soup" due to the various acronyms like RSUs, ISOs, and NSOs. He stresses the importance for employees to first understand what these equity awards are and then how they are taxed.

"there's some newer things bill sweet calls this late stage capitalism where there's this there's this slew of new products to either avoid or defer taxes 351 exchanges come come into mind where you take a you take a concentrated position you find a group of investors you bundle it into an etf and you have a diversified basket now rather than a concentrated position it doesn't necessarily solve the tax problem because your basis is your basis you can't change that"

Artzerounian discusses innovative financial products, termed "late stage capitalism" by Bill Sweet, designed to defer or avoid taxes, such as 351 exchanges. He notes that while these can help diversify concentrated positions by bundling them into an ETF, they do not alter the original cost basis, meaning the tax liability remains.

"The biggest thing that changed is what didn't change and that's tax rates the the other changes that we're seeing come into effect are a lot of on the deduction side there's more strategy around tax deductions charitable giving state and local taxes how to bump from 10k up to 40k for certain taxpayers"

Artzerounian highlights that the most significant tax development was the lack of change in tax rates, which were scheduled to increase. He points out that other notable changes are occurring on the deduction side, offering more strategic opportunities for charitable giving and state and local taxes.