The Value of a Conversation

The Value of a Conversation

It’s easy to delay conversations that might feel as if they are more trouble than they are worth. As comprehensive financial planners and investment advisors, we want to make it easy for you to have a conversation that you might have otherwise delayed. We personally see—time and time again—the value of a conversation. In this video, you can hear about how we were able to save my parents over $300,000!

Financial planning requires an ongoing maintenance plan as goals evolve. We want to ensure a consistency with your goals, your plan, and your investments. As time changes and plans change – as all good plans do – we want to ensure that your plan remains on track. A good plan must review all areas of financial planning, including taxes. Here is an example of how a member was able to avoid a $16,000 tax bill. It all started with a conversation with the advisors from at Halliday Financial.

The Value of a Conversation

A Local 804 member (we will refer to him as “Charlie”) was eager to retire after 30 years of hard work as a package driver. Charlie calls Retire804 to schedule an appointment and ensure that all his ducks were in a row. Charlie had done a great job preparing for retirement and we were happy to confirm that he and his wife would be able to retire without hesitation.

As we were discussing his plans for retirement, Charlie mentioned he intends to sell approximately $100,000 worth of company stock to renovate his kitchen as a retirement gift for him and his wife. Upon hearing the news, we needed to make Charlie aware of the complexities involved with the capital gains tax. Having purchased UPS stock for over 20 years, Charlie had stock that he bought at a variety of prices ranging from $25 to over $100 a share. The amount you pay for a share of stock is also called cost basis, which is important to know since this is the basis on which taxes are calculated.

When a Local 804 member sells their UPS stock, they can select which shares they want to sell (this is called tax lots). If you do not identify which tax lots you want to sell, then —by default— oldest shares will automatically sell first.

If Charlie were to accept the default option and sell the oldest shares first, the capital gains tax would be applied $90 per share, creating a significant tax bill ($115 Current Value – $25 Cost Basis = $90 Capital Gain).

We showed Charlie how to itemize his tax lots, which allowed him to reduce his capital gains taxes. Some of the stock we sold had a cost basis of $95 per share, which means that $20 per share gain is taxable ($115 Current Value – $95 Cost Basis = $20 Capital Gain). This is a much-favored tax event as opposed to $90 per share.

In total, we saved Charlie over $16,000 in capital gains taxes and his future is looking a lot brighter—and so is his new kitchen! To see what information you are missing call 800-786-1598 or visit our website and fill out a contact form!


Live Events