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.
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.