THE BRIDGEWATER-SOMERVILLE CONNECTION PAGE 8 NOV 2025-JAN 2026 theconnectionsnj.com 80 years of professional service Fee-based Wealth Management Financial Planning Tax-efficient Investing Tailored Service, Disciplined Strategies, and Committed Guidance. Individual Tax Preparation Business Tax Preparation Accounting & Consulting Accounting Services are provided by Shapiro Certified Public Accountants and not a service provided by Raymond James. Shapiro CPA's and Shapiro Financial Group is not a registered broker/dealer and is independent of Raymond James Financial Services. Complimentary Initial Consultation 30 Technology Dr., Warren, NJ 908-222-3770 shapirogroup@raymondjames.com The key to your financial success shapirogrp.com Sophisticated expertise for today and future generations. Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Shapiro Financial Group is not a registered broker/dealer and is independent of Raymond James Financial Services. e know the expression, do not put all your eggs in one basket. My holistic approach to allocation is to develop 3 separate buckets—tax-deferred assets, including pretax retirement accounts, post-tax assets-Roth accounts, and after-tax savings. Many investors I meet with tend to have a larger portion of savings in pretax retirement accounts, as I reference “top-heavy”. This is in part from making annual pretax contributions to items including 401K plans, and rollovers to a traditional IRA. At distribution, this leads to higher taxable income and further these funds are characterized as ordinary income. Developing tax-free retirement funds can be challenging. Many taxpayers are limited in making Roth contributions. Many 401K plans provide the opportunity to make both pretax and Roth post-tax contributions. Although Roth contributions are not tax-deductible, for some, the tax-free compounding over time can be worth significantly more than the upfront tax deduction. Either way, pre- or post-tax retirement contributions should take full advantage of any company-matching contributions; it just makes good sense. Post Tax Savings, as the name suggests, is money saved after paying applicable income taxes from the source. This could include employment, investment income, trust income, and IRA distributions. Inheritance and Life Insurance proceeds are typically received tax-free by the recipient. By now, my readers know I do not want investors to pay any unnecessary income taxes. Carefully growing generational wealth requires skill and attention. Taxes have become more relevant given the rising markets we have experienced over the last few years. No one likes to see big gains on their year-end 1099 tax form. For the income investor, I believe an allocation to municipal bonds could provide an attractive taxable equivalent yield. Particularly in hightax states such as NJ and NY. Of course, investments in municipal securities may not be appropriate for all investors. Equity Income-type investments may receive a lower capital gains tax rate on the dividends generated. Taxable Equity accounts should manage realized capital gains as they reduce after-tax returns. Actively managed mutual funds are generally not tax efficient. I believe the vehicle of choice for many successful investors is the separately managed account (SMA). A type of SMA is a direct index approach, which is designed to help manage capital gains. A key benefit of the direct index account is that it can be funded with your existing securities. If active management does not meet your needs, passive investing, more commonly found in Exchange Traded Funds (ETFs), tends to be tax efficient. A professionally assembled Net worth statement is a great place to start. A detailed Net worth statement will illustrate how full or empty each of your 3 buckets might be. As a boutique office, we provide personalized service to our clients. Our practice is skilled in advanced planning techniques and is equipped to manage the complex needs of successful individuals and closely held or family businesses. We believe that efficient tax management can add meaningful long-term returns. I personally have over four decades of experience helping clients across a wide range of financial issues. If you would like us to help you with any concepts in this article, please do not hesitate to contact me directly at Shapiro Financial Group Shapiro Financial Group: 30 Technology Drive, Warren, NJ, 908-222-3770. Every investor’s situation is unique, and you should consider your investment goals, risk tolerance, and time horizon before making any investment. Before making an investment decision, please consult with your financial advisor. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. This does not constitute any recommendation. Opinions are those of Robert Shapiro and not necessarily those of Raymond James. Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Shapiro Financial Group is not a registered broker/dealer and is independent of Raymond James Financial Services. FINANCIALFORUM How Full Are Your Buckets? By Robert Shapiro CPA, Financial Advisor Branch Manager-RJFS A professionally assembled Net worth state your investment goals, risk tol matters with the appropriate pro Securities offered through Raymond James Finan W
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