Year-end planning: Topics to keep in mind, research to reference

Our research shows that an annual rebalancing is optimal for investors who don’t participate in tax-loss harvesting or where maintaining tight tracking to the multiasset benchmark portfolio is not a concern.

Investors typically decide whether to convert to a Roth IRA from a traditional IRA by comparing their current and expected future marginal tax rates. The traditional wisdom has been that higher future tax rates make conversion more desirable and lower ones make it less so. Our researchers describe a break-even tax rate (BETR) that yields a more accurate assessment.

Americans donated $471 billion to charitable organizations in 2020. Our research explores the three key elements of a successful giving plan: When to give, what to give, and how to give.

Asset location is the strategic placement of assets into investment accounts to maximize total after-tax returns. For individual investors, it means locating assets based on their relative tax efficiency among tax-advantaged and taxable accounts. Our researchers consider which asset location method best supports wealth accumulation.

Tax-loss harvesting has been promoted as a “free lunch” for increasing investment returns. Our researchers explore its potential and demonstrate how to customize a tax-loss harvesting strategy for optimal benefits. A case study illustrates how the benefits can vary considerably by investor.