You’ve finally found the vacation home of your dreams and are ready to make an offer. Or, perhaps you’ve recently retired and are ready to begin drawing income from your portfolio while you plan your next big trip or perhaps you are looking to stave off tapping Social Security for a few more years. After years of investing, you’re confident you’ve got the funds to cover these expenses, but tapping your account may trigger an unwelcome surprise: taxes.
Indeed, many investors trip up at this stage of realizing profits. They sell securities that trigger large amounts of taxable gains or are subject to higher federal income tax rates, instead of those that may result in a lower tax liability, or they short-change future potential investment gains and income by selling assets unnecessarily early or locking in losses in a down market.
A potentially more tax-efficient solution exists. Morgan Stanley’s Intelligent Withdrawals tool uses sophisticated analysis across all your accounts to efficiently find a suitable withdrawal strategy to help reduce the federal income taxes you may owe. This streamlined analysis helps determine not only which accounts to draw from first, but also which securities within those accounts you should sell to help achieve tax efficiency and maintain your investment strategy.