TAX PLANNING

Asset Location Optimizer

The right asset in the right account type reduces lifetime tax drag — often by 0.5–1.5% annually.

RothTraditional IRA / 401(k)Taxable

Recommendations by asset class

US Equity (Growth)

Tax-free compounding maximizes growth; avoid IRS on appreciation

Roth+1.2% efficiency

International Equity

Foreign tax credit (FTC) only available in taxable accounts; dividends taxed at LTCG rates

Taxable+0.8% efficiency

US Equity (Value/Dividend)

Defers dividend income; qualified dividends lose LTCG treatment in Roth anyway

Traditional IRA / 401(k)+0.6% efficiency

Fixed Income / Bonds

Interest taxed as ordinary income — defer it; bonds drag Roth compounding less than equities

Traditional IRA / 401(k)+1.4% efficiency

REITs

REIT dividends are non-qualified ordinary income; sheltering them saves 15–37% on distributions

Traditional IRA / 401(k)+1.8% efficiency

Alternatives (Private)

K-1 complexity incompatible with IRAs; unrelated business income (UBTI) triggers IRA tax

Taxable+0.3% efficiency

Inflation-Protected (TIPS)

Phantom income on inflation adjustments taxed as ordinary income — defer it

Traditional IRA / 401(k)+1.1% efficiency

Small-Cap Equity

High growth potential; tax-free compounding most valuable for highest-return assets

Roth+1.5% efficiency

Roth

Highest-expected-return assets
Small-cap & growth equities
Assets you plan to hold longest
Avoid bonds (wastes tax-free compounding)

Traditional IRA / 401(k)

Fixed income / bonds (defer interest)
REITs (non-qualified dividends)
TIPS (defer phantom income)
Dividend-heavy equities

Taxable

International equities (FTC benefit)
Tax-managed / index funds (low turnover)
Municipal bonds if in high bracket
Assets you need before 59½

Asset location benefits depend on account sizes, time horizon, and tax rates. The foreign tax credit benefit applies only in taxable accounts; verify eligibility annually. AI-assisted — verify before client delivery.