Life and taxes, not death and taxes

Taxes aren’t fun but your life should be. We’ve got a couple of tools to help with taxes. See if they’re right for you.

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Benjamin Franklin once said, "In this world, nothing can be said to be certain, except death and taxes."

At Betterment, we prefer a more optimistic take: Nothing is certain, except life and taxes.

And we want to help you live a better life by helping you save money on taxes as you invest.

The main idea: Unlike many investment managers, we automate advanced tax-efficient strategies, making life easier if the features are right for you, including: 

  • Tax Loss Harvesting+ (TLH+)
  • Tax Coordination

Let’s see how each strategy works.

What is TLH+?

  • TLH+ seeks to increase the annual returns in a taxable account by automating an advanced tax-saving strategy.
  • When investments lose value, Betterment looks for opportunities to sell them to help offset the taxes that come with income and capital gains. You can offset up to $3,000 of your ordinary income each year with tax losses.
  • TLH+ coordinates harvests across your household’s Betterment accounts, including IRAs, 401(k)s, joint accounts, and trusts.

What is Tax Coordination?

  • Tax Coordination is designed to optimize and automate a strategy called asset location. It organizes your portfolio so that the highest-tax assets go into the accounts with the biggest tax breaks.
  • Using Tax Coordination can help you make the most out of every dollar you invest for retirement because it is designed to minimize your tax liability while maximizing your after-tax returns.
  • Tax Coordination only manages accounts held at Betterment within a retirement goal, so it may be worth considering your personal situation and if rolling over an IRA or 401(k) prior to adding a taxable account is the right call for you.

The big picture: Taxes aren’t fun but your life should be. So we do our best to automate these advanced tax strategies for you.

Want to see if these tax-efficient strategies are for you? Log in to your Betterment account from a web browser and navigate to the “Performance” section. You can learn more about TLH+ and Tax Coordination and turn them on if they’re right for you.

Don’t have a Betterment account? Choose from an expert-built, diversified portfolio to start investing today. 

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