Latest news with #MarinerWealthAdvisors
CNBC
6 days ago
- Business
- CNBC
Look to this strategy for tax-advantaged returns and downside mitigation, UBS says
With the S & P 500 up marginally in 2025 and bonds seeing sharp price swings, structured notes could give investors a combination of returns and downside protection – if used carefully. Structured notes are hybrid assets: They combine a debt instrument with derivatives, and they're tied to the performance of another asset, like a stock or an index. These notes can also offer investors some measure of protection to mitigate downside in this underlying asset. Investors who purchase these investments are expected to hold them up until their maturity date to capture their full benefit. These notes come in different flavors. For instance, some generate income , while others offer some level of principal protection in the form of a buffer. The notes are primarily in the wheelhouse of sophisticated and high-net-worth investors due to their complexity. "People want both the downside protection and the income," said Ashton Lawrence, certified financial planner and senior wealth advisor at Mariner Wealth Advisors in Greenville, South Carolina. He has used income notes to complement clients' fixed income sleeve. "Each one will have different characteristics that will make it advantageous in a fixed income allocation." UBS recently highlighted a certain structured note strategy that aims to combine downside protection and the prospect of gains at a favorable tax rate. Step-down trigger autocallable notes as diversifiers The firm called out step-down trigger autocallable notes, or SD-TANs, in a May 19 report that touted their ability to complement a portfolio that holds stocks and bonds. "Historically, SD-TANs have exhibited a low correlation to other asset classes, attractive returns, and a very low probability of losses," said Daniel Scansaroli, head of portfolio strategy and UBS Wealth Way Solutions, chief investment office, Americas, at UBS. "While they have been unlikely to outperform direct stock investments, they have historically outperformed bonds, especially on an after-tax basis, in most market environments," he added. In UBS's example, the firm discusses a note that's linked to the S & P 500 and the EuroStoxx 50 indexes, with a maturity of five years and an autocall return – or the return paid when the underlying asset reaches a certain level and is called back by the issuer – of 8.5%. If the two indexes are above their starting level after 12 months, then the note is called, resulting in a return of principal plus 8.5%, according to UBS. The longer the notes are outstanding, the greater the return. The note in UBS's example also has a 25% step-down trigger downside protection: If the indexes are down 25% or less at maturity, the principal and the 8.5% annualized call return. If either index is off more than 25%, the investor gets the principal less the decline of the worst performing index, the firm said. Tax considerations There's a tax planning component at work, too. These step-down trigger autocallable notes can fit in a taxable account. Unlike bond interest, which can be subject to ordinary income tax rates as high as 37% – or 40.8% if accounting for the net investment income tax – returns from these notes are treated as long-term capital gains, the firm said. That means they'd face a top tax rate of 20%, or 23.8% when including the net investment income tax. There are lots of catches for investors to be aware of, however. For starters, these notes are complicated, and investors need to be comfortable with tying up their money until maturity. The income they pay isn't the same as what investors would get from bonds, either, UBS said. While bonds pay interest on a semiannual basis, these step-down autocallable notes are likely to be called back in 12 to 15 months – and that's when investors pick up their returns, the firm noted. That's something to bear in mind for investors who have time-sensitive cash flow needs they need to meet. "When considering the amount and type of structured investments to add to your portfolio, assess your objectives, risk tolerance (including issuer and underlying asset risk), and liquidity needs, as secondary markets are limited," Scansaroli of UBS said.
Yahoo
19-05-2025
- Business
- Yahoo
It's 'premature' and 'cavalier' to buy the dip, strategist says
Investors are deciding how to position their portfolios as stocks and bonds are currently selling off. Kathy Jones, Charles Schwab chief fixed income strategist, and Jeff Krumpelman, Mariner Wealth Advisors chief investment strategist and head of equities, join Morning Brief with Madison Mills to discuss the market moves. To watch more expert insights and analysis on the latest market action, check out more Morning Brief here. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNBC
01-05-2025
- Business
- CNBC
This lesser-known 401(k) feature can kickstart your tax-free retirement savings
If you're eager to increase your retirement savings, a lesser-known 401(k) feature could significantly boost your nest egg, financial advisors say. For 2025, you can defer up to $23,500 into your 401(k), plus an extra $7,500 in "catch-up contributions" if you're age 50 and older. That catch-up contribution jumps to $11,250 for investors age 60 to 63. Some plans offer after-tax 401(k) contributions on top of those caps. For 2025, the max 401(k) limit is $70,000, which includes employee deferrals, after-tax contributions, company matches, profit sharing and other deposits. If you can afford to do this, "it's an amazing outcome," said certified financial planner Dan Galli, owner of Daniel J. Galli & Associates in Norwell, Massachusetts. Here's a look at other stories impacting the financial advisor business. "Sometimes, people don't believe it's real," he said, because you can automatically contribute and then convert the funds to "turn it into tax-free income." However, many plans still don't offer the feature. In 2023, only 22% of employer plans offered after-tax 401(k) contributions, according to the latest data from Vanguard's How America Saves report. It's most common in larger plans. Even when it's available, employee participation remains low. Only 9% of investors with access leveraged the feature in 2023, the same Vanguard report found. That's down slightly from 10% in 2022. After-tax and Roth contributions both begin with after-tax 401(k) deposits. But there's a key difference: The taxes on future growth. Roth money grows tax-free, which means future withdrawals aren't subject to taxes. To compare, after-tax deposits grow tax-deferred, meaning your returns incur regular income taxes when withdrawn. That's why it's important to convert after-tax funds to Roth periodically, experts say. "The longer you leave those after-tax dollars in there, the more tax liability there will be," Galli said. But the conversion process is "unique to each plan." Often, you'll need to request the transfer, which could be limited to monthly or quarterly transactions, whereas the best plans convert to Roth automatically, he said. Before making after-tax 401(k) contributions, you should focus on maxing out regular pre-tax or Roth 401(k) deferrals to capture your employer match, said CFP Ashton Lawrence at Mariner Wealth Advisors in Greenville, South Carolina. After that, cash flow permitting, you could "start filling up the after-tax bucket," depending on your goals, he said. "In my opinion, every dollar needs to find a home." In 2023, only 14% of employees maxed out their 401(k) plan, according to the Vanguard report. For plans offering catch-up contributions, only 15% of employees participated.
CNBC
30-04-2025
- Business
- CNBC
Roth conversions are popular when the stock market dips. Here's how to know if one is right for you
As investors wrestle with tariff-induced stock market volatility, there could be a tax-planning opportunity. But it's not right for all investors, experts say. The strategy, known as "Roth conversions," transfers pretax or nondeductible individual retirement account money to a Roth IRA, which starts future tax-free growth. The tradeoff is paying upfront taxes due on the converted balance. This planning move has been gaining popularity. As of Dec 31, the volume of Roth conversions increased by 36% year-over-year, according to the latest data from Fidelity Investments. More from Personal Finance:What Consumer Financial Protection Bureau cuts could mean for consumersInternational students rethinking U.S. college plans amid visa policy shiftNearing retirement? These strategies can protect savings from tariff volatility Roth conversions are especially attractive when the stock market drops, according to certified financial planner Ashton Lawrence, director at Mariner Wealth Advisors in Greenville, South Carolina. Here's why: Amid market volatility, you can convert a smaller balance and pay less upfront taxes. When the market recovers, you'll secure tax-free growth in the Roth account, Lawrence said. Still, there are some key factors to consider before converting funds, experts say. When weighing Roth conversions, "the single biggest factor" should be your current marginal tax rate vs. your expected rate when you withdraw the funds, said George Gagliardi, a CFP and founder of Coromandel Wealth Management in Lexington, Massachusetts. (Your marginal rate is the percent you pay on your last dollar of taxable income.) Typically, you should aim to time planning moves that incur taxes — including those from Roth conversions or future withdrawals — when rates are lower, experts say. But boosting your adjusted gross income can lead to other tax consequences, such as higher Medicare Part B and Part D premiums. That's why it's important to run tax projections before converting funds. When completing a Roth conversion, you'll owe regular income taxes on the converted balance, which should also factor into your decision, Lawrence said. Generally, you should aim to pay those taxes from other sources, such as savings. "The last thing you want" is to use part of the converted balance to cover taxes because then there will be less to transfer to the Roth account, he said. Another factor could be your legacy goals — including whether heirs, such as adult children, could inherit part of your pre-tax retirement balance, experts say. Since 2020, certain heirs must follow the "10-year rule," which stipulates that inherited IRAs must be depleted by the 10th year after the original account owner's death. This applies to beneficiaries who are not a spouse, minor child, disabled, chronically ill or certain trusts. In some cases, clients pay taxes upfront via a Roth conversion to spare their future heirs from the bill, Lawrence said. Alternatively, some pass along the tax liability when heirs are in a lower tax bracket. "We know that Uncle Sam is going to get his fair share, but we can be smart about it," he added.
Yahoo
30-03-2025
- Business
- Yahoo
Fidelity Reveals Top 3 Sources of Retiree Income Today: Should You Diversify Yours?
Planning for a successful retirement isn't just about saving enough, it's about creating a reliable mix of income streams that can support your lifestyle in a tax-efficient and sustainable way. Find Out: Read Next: Fidelity's 2025 State of Retirement Planning study revealed the top three sources of retiree income today: Social Security: 77% Pensions: 48% Personal savings (such as checking or savings accounts): 41% These remain the most common ways retirees support themselves, but financial experts say that diversifying income sources, especially in an uncertain economic landscape, may be key to long-term stability and peace of mind. Before making changes to a retirement portfolio, individuals should first consider their broader financial objectives. This includes factors like cash flow needs, expected retirement expenses and longer-term plans such as buying property or supporting children or grandchildren with educational costs. As Jennifer Kohlbacher, CPA and director of wealth strategy at Mariner Wealth Advisors, pointed out, understanding these goals helps inform decisions around rebalancing and aligning your portfolio with risk tolerance and liquidity needs. Learn More: One of the biggest concerns in retirement is the possibility of outliving your money, according to Yehuda Tropper, CEO of Beca Life Settlements. This risk is magnified by the rising costs of healthcare and long-term care. 'If your savings run out, you may find yourself relying only on Social Security, and with the average monthly benefit hovering around $1,900, that likely won't be enough to cover all your basic living expenses,' Tropper said. Diversifying income sources can be a practical way to help prevent this scenario. Tropper recommended combining 'guaranteed assets' — such as Social Security, pensions and annuities — with 'liquid assets,' like cash reserves or dividend-paying stocks. Additional sources like real estate or commodities (like gold) may also provide inflation protection and help diversify income. This approach creates flexibility while supporting both day-to-day needs and long-term goals. Kohlbacher also emphasized the importance of evaluating all investment accounts and your full financial picture before making portfolio adjustments. For example, those with significant real estate holdings may not need more exposure to the same asset class elsewhere in their portfolio. A complete review of your assets, including retirement and taxable accounts, can lead to smarter, more strategic rebalancing decisions. Tax planning is also important in your retirement income strategy, especially for those with taxable investment accounts. One technique to consider is direct indexing, which involves purchasing individual securities that mirror a market index rather than buying a bundled fund. This can provide more control over specific stock exposure and concentration risk, Kohlbacher said. Direct indexing also enables tax-loss harvesting, a way of selling underperforming assets to offset capital gains and potentially reduce tax liabilities. For those with charitable intentions, a charitable remainder trust (CRT) may offer both tax benefits and an opportunity to give back. A CRT is an irrevocable trust that can be established during a person's lifetime or as part of an estate plan, Kohlbacher said. By donating assets to a CRT, individuals may qualify for an immediate income tax deduction and remove those assets from their taxable estate. The donor can retain an income stream from the trust for life or for a fixed period (up to 20 years), after which the remaining assets are transferred to the designated charity. Kohlbacher noted that CRTs are exempt from federal income tax, which means that highly appreciated assets can be sold within the trust without triggering capital gains — providing flexibility and tax efficiency. While Social Security, pensions and savings remain key income sources for many retirees, building a more diversified and tax-smart plan can help protect your retirement lifestyle. More From GOBankingRates4 Things You Should Do if You Want To Retire Early 12 SUVs With the Most Reliable Engines 6 Big Shakeups Coming to Social Security in 2025 This article originally appeared on Fidelity Reveals Top 3 Sources of Retiree Income Today: Should You Diversify Yours?
