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Medicare Advantage Part C — Not too soon to start planning for 2027

R Quinn  |  Aug 11, 2026

"You will miss Dick Q too much if you stick to it."
- Linda Grady
Read more »

My Sister – A Reflection One Year Later

Andrew Clements  |  Aug 12, 2026

"Thank you, Jack. Over the past year, I’ve realized that I can’t change the sadness of losing Tory, but I can choose how I remember her. Focusing on the laughter, love, and wonderful memories she left behind has helped make the grief a little easier to carry. I appreciate your kind words."
- Andrew Clements
Read more »

Roth Conversions and Taxes

ArticleJohn Urban  |  Aug 8, 2026

EVERY ARTICLE ABOUT Roth conversions says the same thing: pay the tax from taxable money, not from the IRA. That is good advice if you have taxable money. Plenty of retirees do not. Their savings sit almost entirely in a traditional IRA, built from years of 401(k) contributions and a rollover at retirement, with little brokerage money and no cash reserve worth naming. For them, “pay from outside money” is not advice. It is a condition they do not meet. Their real choice is a self-funded conversion or no conversion at all. The familiar warning is that self-funding requires a gross-up. You withdraw money to pay the conversion tax, that withdrawal is itself taxable, so you have to withdraw a little more. Less discussed is what else that withdrawal sets off. It makes more of your Social Security taxable, it raises your Medicare premiums two years later, and in a high-tax state it enlarges the amount that has to leave the IRA. Here is what those three cost, on one household. A cautious conversion Meet Dianne, a composite rather than a real person. She is 66, single, retired to Florida, with $1 million in a traditional IRA and nothing outside it. Social Security pays her $28,000 a year. She is past 59 and a half and already on Medicare. Florida keeps state income tax out of the arithmetic for now. She converts $40,000. Careful, modest, the size people choose when they are trying not to do anything dramatic. The tax on that conversion, paid from a checking account she does not have, would be $4,234. Funding it from the IRA instead, the withdrawal that covers it is $5,125, and her tax rises to match. That extra $891 is 17.4% of the $5,125 she withdrew. Her ordinary-income bracket is 12%. Twelve of those points are the tax on the withdrawal itself, which is the gross-up everybody expects. The other 5.4 points come from $2,300 of her Social Security being pulled into taxable income by that same withdrawal. Paying from cash, $21,500 of her benefit would be taxable. Self-funding, $23,800 is. The difference is caused by how she paid, not by what she converted, and nothing on her return will label it. Not a smaller version of a large one The effect is not linear. Run the same woman at $150,000 and 85% of her benefit, the statutory maximum, is already taxable before she funds the tax. The funding withdrawal drags in nothing further, and this particular cost is zero. That is not an argument for converting more. It is an argument against assuming a small conversion is simply a smaller version of a large one. The one that looks cautious can carry the higher marginal rate. What self-funding actually costs Give Dianne the $150,000 conversion, still with no outside cash, and add the state question. Still in Florida, $195,469 has to leave the traditional IRA to put $150,000 into the Roth. Move her to California, changing nothing else, and it is $219,751. That is $1.30 of IRA spent for every dollar reaching the Roth, against $1.47, and the gap is California income tax compounded through the gross-up. If a move across state lines is anywhere in your plan, the order of operations may matter more than the size of the conversion. But $1.47 invites a conclusion it does not support, and I would rather correct that myself than let it travel. A conversion is taxable whichever pocket pays. Of the $69,751 Dianne withdraws in California, roughly $44,639 replaces cash she would have spent anyway. The incremental cost of self-funding, in wealth given up, is $25,111. About 17% of the conversion, not 47. The bill that arrives in 2028 At that $150,000 conversion, self-funding also costs Dianne $1,735 in higher Medicare premiums, a surcharge of $6,355 rather than $4,620, charged on top of the standard premium, for one year, and hers alone as a single filer. The bill arrives two years late. Medicare sets her 2028 premiums from her 2026 income, so the cost is invisible at the moment she is deciding how to pay the 2026 tax. When it can still make sense Doing nothing is not free either. Money left in a traditional IRA comes out eventually, under required distributions, at whatever rates apply then, possibly to a survivor filing single, possibly to heirs facing a 10-year deadline. Where self-funding still holds up, a few things tend to be true. The rate gap is durable rather than a one-year accident. Whether it repays a cost this size depends on time, future tax rates and investment returns. A temporary dip in income is a thin foundation. A structural window, after retirement and before Social Security or required distributions begin, is more compelling. There is runway, because shrinking the portfolio to change its tax character needs years of tax-free growth to earn back. Age 59 and a half is cleanly behind you. The converted amount is not subject to the 10% additional tax on early distributions. A separate distribution taken to pay the tax generally is, unless an exception applies. And enough is left afterward. Check the balance after the funding withdrawal, not after the conversion. Dianne’s California IRA drops to $780,249, and whether that funds the next 30 years matters more than whether the conversion was tax-efficient. A practical warning about withholding Withholding from the conversion is not a cheaper way to pay the tax. It reduces what reaches the Roth. Elect 24% on Dianne’s $40,000 conversion, as this illustration does rather than as any custodian requires, and $9,600 goes to the IRS while $30,400 lands in the Roth, against $4,234 actually owed. The cash comes back next spring as a refund. The Roth room does not come back at all. Restating the rule Pay the conversion tax from outside cash if you have it. That remains the best answer. It is not an answer for the retiree whose savings are almost entirely in a traditional IRA. For that person, “never pay from the IRA” skips the actual decision, which is whether a self-funded conversion, with its full marginal cost, beats leaving the money where it is. Before deciding, count the gross-up, the Social Security effect, state tax and the Medicare bill two years later. Sometimes that arithmetic still says no. It beats applying a rule written for somebody with a different balance sheet. ________________________________________________________________________________ John Urban is the founder of RetireSmartIRA, a retirement tax-planning app. Earlier, he founded GT Nexus, a supply-chain software company acquired by Infor in 2015. He lives in Northern California with his wife, Kathy, and enjoys time with family, travel, reading, Bay Area sports, and the occasional deep dive into the fine print of the tax code.
Read more »

What is the right percentage?

R Quinn  |  Aug 9, 2026

"I log on to my investments everyday, just out of habit. My bank sends automatic updates on account balances. I make sure I stick with my theory, but there is no budget. I see no difference between my method at any income level. It’s a forced way to live within one’s means, you can’t spend more than you have. Of course, your example is an exception. There are always exceptions. In the example, it probably means a lower lifestyle, lower budget, lower everything regardless."
- R Quinn
Read more »

Don’t Let a Roth Conversion Trigger a Penalty

John Urban  |  Jul 8, 2026

"Hi Grant, and thanks for the article (John Urban) and this comment. Sorry to be a few months late commenting but I think your approach is very intriguing and I have questions for you if you have time to help me understand your process. Firstly, my situation is retired, no W2 income and RMDs to be satisfied from conventional IRA before the end of the year. Also, not yet concerned over IRMAA impact at this time.  Q1. The 1, 2, 3 process says one can do a rollover contribution to the Roth account with money from a regular brokerage or other non-IRA account within 60 days. Is this correct? I thought that a rollover should be IRA to IRA (Roth and/or conventional). Q2. About the 1, 2, 3, process. Why not make the conversion and pay the taxes directly from the converting IRA at the same time. Brokerage will withhold the amount specified to make it a single operation on my part. THEN I take money from the non IRA account and rollover the amount withheld in taxes into the target Roth account. I realize this violates the guidance that taxes shouldn't be withheld from a conversion, however, since the taxable amount is being deposited almost immediately back into the Roth account then it would seem to be a wash. What are your thoughts? Am I missing something? Thanks, Derek"
- Derek Shuttleworth
Read more »

For most retirees, the greatest fear is not death—it is running out of money before they die.

Matt Halperin  |  Aug 6, 2026

"I understand, thanks, Dunn"
- DAN SMITH
Read more »

Can a Value fund also be a Growth fund?

Harold Tynes  |  Aug 11, 2026

Be the first to comment.
Read more »

Risk and Taxes

ArticleAdam M. Grossman  |  Aug 8, 2026

AFTER YEARS OF heady gains in the stock market, many investors are facing the same question: To manage risk, they’d like to cut back on one or more of their holdings. But because of the potentially costly tax bill that might result, they aren’t sure exactly how to do that. How can you square this circle? One easy option would be to donate appreciated assets to charity. But that would make sense only if it aligns with your charitable goals and, of course, if you don’t need those funds for other uses. How else could you strike a balance between managing risk and limiting taxes? Here’s how I would answer this question. Step 1. I’d start by estimating the potential risk level among your holdings. While there’s no single litmus test, you could ask the following questions. First, how large a portion of your assets does any single holding represent? As a rule of thumb, I’d focus first on individual stocks that top 5%. Why 5%? My operating assumption is that any individual stock could experience a 50% decline during a crisis. So if a holding is limited to 5%, then a 50% drop would result in an overall portfolio impact of just 2.5%. I see that as very manageable. To be sure, stocks can certainly decline by more than 50%, but I view this as a reasonable figure for risk management. While I worry most about the risk posed by single stocks, it’s also important to examine the overall composition of your portfolio. That’s because, counterintuitively, a portfolio of 30 stocks could end up being riskier than a group of just 10. Harry Markowitz, the father of Modern Portfolio Theory, explained why. In his initial work back in the 1950s, Markowitz used railroad company stocks to explain the concept of diversification. There’s nothing inherently wrong with railroad stocks, Markowitz explained. But if a portfolio consists of only railroad stocks, then that would be a problem—because companies in the same industry are often impacted by the same economic factors. In other words, a portfolio consisting of a large number of holdings might only appear diversified, so it’s important to look under the hood. Another risk factor to consider: Do you work for a public company and own the company’s stock? If so, that would be a reason to consider diversifying more quickly (within the permitted time windows). What if you own only mutual funds or ETFs? Diversified funds tend to be less risky than individual stocks, but that’s not always the case. The fund industry launches as many as 1,000 new funds each year, including many with very aggressive strategies. So it’s important to check each fund’s holdings. You can find that information on the fund company’s website or on a site like Morningstar (Here, for example, are the top holdings in Vanguard’s S&P 500 index fund). Step 2. Next, you’d want to estimate how much a loss might impact you. As with most questions in personal finance, there are two answers to consider: how it might affect you in dollar terms, and the degree to which a loss would simply be upsetting. Both are important. Step 3. If you determine the holding in question does represent a material risk, then you’d want to estimate the potential tax impact. Here are questions you might ask: What would the tax be if you exited the entire position? Would it push your income into the next capital gains bracket? Are there tax lots with less appreciation you could take advantage of? Do you have losses you could use to offset some of the gains? Do you expect to be in a higher or lower tax bracket next year? Step 4. If you conclude that the tax bill might be significant, what steps could you take to reduce a holding tax-efficiently? Here are strategies to consider: For starters, I suggest deciding on a target percentage for the holding. While ideally I prefer bringing any individual stock down to a 5% weighting, that figure isn’t a rule. All things being equal, the larger a portfolio, the more risk you can afford. After deciding on a target percentage, the simplest approach would be to set up a long-term sale plan—like dollar cost averaging but in reverse. Suppose you’d like to sell 1,200 shares of a given stock. You could sell 100 shares each month for twelve months. You’d do that regardless of whether the stock happens to be up or down that month. That 12-month schedule isn’t a rule. If your holding is very significant, you might opt for a longer timeframe. On the other hand, if you feel the stock has a particularly highflying valuation, you might choose a quicker pace. The key, in my view, is just to get started. As the writer Carveth Read wrote, “it’s better to be roughly right than precisely wrong.” Selling a stock down over time is the simplest way to reduce risk, but it’s hardly the most tax efficient. Another approach that’s been gaining in popularity is known as a 351 exchange fund. With a 351, the idea is that a group of investors, each with their own portfolios of appreciated securities, come together and collaborate to diversify their respective holdings. To provide a simplified illustration, imagine two investors, each with a concentrated holding, one in Microsoft and the other in Apple. Each would benefit by diversifying, and that’s what a 351 exchange fund allows. Each would contribute their respective shares into a common pool that would then hold some Apple and some Microsoft. This new investment would be structured as an ETF, and each investor would be issued shares proportional to the size of their contribution. Importantly, the initial creation of a 351 fund doesn’t entail any tax. Taxes are due only when an investor later sells shares of that ETF. This is a simplified example. In reality, a 351 exchange fund would hold many more than just two holdings. They’re actually required to meet various diversification requirements. As a result, investors in 351 funds may end up feeling sufficiently diversified and thus comfortable holding their fund shares for the long term. That would make this strategy potentially the most tax-efficient way to manage portfolio concentration risk. This is just an overview, though. If you’re interested in 351 strategies, I suggest further research. In July, The Wall Street Journal discussed these funds in some detail. In addition, a firm called Alpha Architect, the largest player in this area, has a number of helpful explanatory videos on its site.   Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.
Read more »

“Gerontocracy” in America

Chris Rush  |  Aug 6, 2026

"I’ll not render an opinion of a book that I have not read, but several age impaired presidents and numerous lawmakers are a fine argument for age limits. Otherwise, like Mark and David write below, it’s no surprise that based on wealth and numbers, we boomers remain a powerful voting bloc."
- DAN SMITH
Read more »

Looking Back On My Hard Luck Days

DAN SMITH  |  Aug 7, 2026

"Dick, your 3rd point is so powerful that it overshadows the first two. Connie is going through so much at this time, and she is lucky to have you in her corner. While you strive to take good care of Connie, don’t forget to take care of yourself as well. "
- DAN SMITH
Read more »

FIFA Financials

R Quinn  |  Jul 19, 2026

"Me, too. Prices not outlandish."
- Jeff Bond
Read more »

Before Someone Else Decides

Kathleen Rehl  |  Aug 2, 2026

"What a difficult and unsettling situation for all of you. You’ve described one of the hardest parts of planning ahead: family members can clearly see that living alone is becoming unsafe, yet the older adult is still entitled to make his own choices—even choices that others find baffling, like adopting a puppy while recovering from surgery. Your words, “we’re living some of it in real time” really struck me. This is precisely the narrow window when candid conversations and acceptable choices may still be possible, before a medical crisis forces the decision. I hope his upcoming surgery goes well and that your family can help him accept some form of support, whether in his home or closer to one of you, while he can still have a meaningful voice in what happens next. Thank you for sharing such a vivid, honest example of why these conversations matter."
- Kathleen Rehl
Read more »

Medicare Advantage Part C — Not too soon to start planning for 2027

R Quinn  |  Aug 11, 2026

"You will miss Dick Q too much if you stick to it."
- Linda Grady
Read more »

My Sister – A Reflection One Year Later

Andrew Clements  |  Aug 12, 2026

"Thank you, Jack. Over the past year, I’ve realized that I can’t change the sadness of losing Tory, but I can choose how I remember her. Focusing on the laughter, love, and wonderful memories she left behind has helped make the grief a little easier to carry. I appreciate your kind words."
- Andrew Clements
Read more »

Roth Conversions and Taxes

ArticleJohn Urban  |  Aug 8, 2026

EVERY ARTICLE ABOUT Roth conversions says the same thing: pay the tax from taxable money, not from the IRA. That is good advice if you have taxable money. Plenty of retirees do not. Their savings sit almost entirely in a traditional IRA, built from years of 401(k) contributions and a rollover at retirement, with little brokerage money and no cash reserve worth naming. For them, “pay from outside money” is not advice. It is a condition they do not meet. Their real choice is a self-funded conversion or no conversion at all. The familiar warning is that self-funding requires a gross-up. You withdraw money to pay the conversion tax, that withdrawal is itself taxable, so you have to withdraw a little more. Less discussed is what else that withdrawal sets off. It makes more of your Social Security taxable, it raises your Medicare premiums two years later, and in a high-tax state it enlarges the amount that has to leave the IRA. Here is what those three cost, on one household. A cautious conversion Meet Dianne, a composite rather than a real person. She is 66, single, retired to Florida, with $1 million in a traditional IRA and nothing outside it. Social Security pays her $28,000 a year. She is past 59 and a half and already on Medicare. Florida keeps state income tax out of the arithmetic for now. She converts $40,000. Careful, modest, the size people choose when they are trying not to do anything dramatic. The tax on that conversion, paid from a checking account she does not have, would be $4,234. Funding it from the IRA instead, the withdrawal that covers it is $5,125, and her tax rises to match. That extra $891 is 17.4% of the $5,125 she withdrew. Her ordinary-income bracket is 12%. Twelve of those points are the tax on the withdrawal itself, which is the gross-up everybody expects. The other 5.4 points come from $2,300 of her Social Security being pulled into taxable income by that same withdrawal. Paying from cash, $21,500 of her benefit would be taxable. Self-funding, $23,800 is. The difference is caused by how she paid, not by what she converted, and nothing on her return will label it. Not a smaller version of a large one The effect is not linear. Run the same woman at $150,000 and 85% of her benefit, the statutory maximum, is already taxable before she funds the tax. The funding withdrawal drags in nothing further, and this particular cost is zero. That is not an argument for converting more. It is an argument against assuming a small conversion is simply a smaller version of a large one. The one that looks cautious can carry the higher marginal rate. What self-funding actually costs Give Dianne the $150,000 conversion, still with no outside cash, and add the state question. Still in Florida, $195,469 has to leave the traditional IRA to put $150,000 into the Roth. Move her to California, changing nothing else, and it is $219,751. That is $1.30 of IRA spent for every dollar reaching the Roth, against $1.47, and the gap is California income tax compounded through the gross-up. If a move across state lines is anywhere in your plan, the order of operations may matter more than the size of the conversion. But $1.47 invites a conclusion it does not support, and I would rather correct that myself than let it travel. A conversion is taxable whichever pocket pays. Of the $69,751 Dianne withdraws in California, roughly $44,639 replaces cash she would have spent anyway. The incremental cost of self-funding, in wealth given up, is $25,111. About 17% of the conversion, not 47. The bill that arrives in 2028 At that $150,000 conversion, self-funding also costs Dianne $1,735 in higher Medicare premiums, a surcharge of $6,355 rather than $4,620, charged on top of the standard premium, for one year, and hers alone as a single filer. The bill arrives two years late. Medicare sets her 2028 premiums from her 2026 income, so the cost is invisible at the moment she is deciding how to pay the 2026 tax. When it can still make sense Doing nothing is not free either. Money left in a traditional IRA comes out eventually, under required distributions, at whatever rates apply then, possibly to a survivor filing single, possibly to heirs facing a 10-year deadline. Where self-funding still holds up, a few things tend to be true. The rate gap is durable rather than a one-year accident. Whether it repays a cost this size depends on time, future tax rates and investment returns. A temporary dip in income is a thin foundation. A structural window, after retirement and before Social Security or required distributions begin, is more compelling. There is runway, because shrinking the portfolio to change its tax character needs years of tax-free growth to earn back. Age 59 and a half is cleanly behind you. The converted amount is not subject to the 10% additional tax on early distributions. A separate distribution taken to pay the tax generally is, unless an exception applies. And enough is left afterward. Check the balance after the funding withdrawal, not after the conversion. Dianne’s California IRA drops to $780,249, and whether that funds the next 30 years matters more than whether the conversion was tax-efficient. A practical warning about withholding Withholding from the conversion is not a cheaper way to pay the tax. It reduces what reaches the Roth. Elect 24% on Dianne’s $40,000 conversion, as this illustration does rather than as any custodian requires, and $9,600 goes to the IRS while $30,400 lands in the Roth, against $4,234 actually owed. The cash comes back next spring as a refund. The Roth room does not come back at all. Restating the rule Pay the conversion tax from outside cash if you have it. That remains the best answer. It is not an answer for the retiree whose savings are almost entirely in a traditional IRA. For that person, “never pay from the IRA” skips the actual decision, which is whether a self-funded conversion, with its full marginal cost, beats leaving the money where it is. Before deciding, count the gross-up, the Social Security effect, state tax and the Medicare bill two years later. Sometimes that arithmetic still says no. It beats applying a rule written for somebody with a different balance sheet. ________________________________________________________________________________ John Urban is the founder of RetireSmartIRA, a retirement tax-planning app. Earlier, he founded GT Nexus, a supply-chain software company acquired by Infor in 2015. He lives in Northern California with his wife, Kathy, and enjoys time with family, travel, reading, Bay Area sports, and the occasional deep dive into the fine print of the tax code.
Read more »

What is the right percentage?

R Quinn  |  Aug 9, 2026

"I log on to my investments everyday, just out of habit. My bank sends automatic updates on account balances. I make sure I stick with my theory, but there is no budget. I see no difference between my method at any income level. It’s a forced way to live within one’s means, you can’t spend more than you have. Of course, your example is an exception. There are always exceptions. In the example, it probably means a lower lifestyle, lower budget, lower everything regardless."
- R Quinn
Read more »

Don’t Let a Roth Conversion Trigger a Penalty

John Urban  |  Jul 8, 2026

"Hi Grant, and thanks for the article (John Urban) and this comment. Sorry to be a few months late commenting but I think your approach is very intriguing and I have questions for you if you have time to help me understand your process. Firstly, my situation is retired, no W2 income and RMDs to be satisfied from conventional IRA before the end of the year. Also, not yet concerned over IRMAA impact at this time.  Q1. The 1, 2, 3 process says one can do a rollover contribution to the Roth account with money from a regular brokerage or other non-IRA account within 60 days. Is this correct? I thought that a rollover should be IRA to IRA (Roth and/or conventional). Q2. About the 1, 2, 3, process. Why not make the conversion and pay the taxes directly from the converting IRA at the same time. Brokerage will withhold the amount specified to make it a single operation on my part. THEN I take money from the non IRA account and rollover the amount withheld in taxes into the target Roth account. I realize this violates the guidance that taxes shouldn't be withheld from a conversion, however, since the taxable amount is being deposited almost immediately back into the Roth account then it would seem to be a wash. What are your thoughts? Am I missing something? Thanks, Derek"
- Derek Shuttleworth
Read more »

For most retirees, the greatest fear is not death—it is running out of money before they die.

Matt Halperin  |  Aug 6, 2026

"I understand, thanks, Dunn"
- DAN SMITH
Read more »

Can a Value fund also be a Growth fund?

Harold Tynes  |  Aug 11, 2026

Be the first to comment.
Read more »

Risk and Taxes

ArticleAdam M. Grossman  |  Aug 8, 2026

AFTER YEARS OF heady gains in the stock market, many investors are facing the same question: To manage risk, they’d like to cut back on one or more of their holdings. But because of the potentially costly tax bill that might result, they aren’t sure exactly how to do that. How can you square this circle? One easy option would be to donate appreciated assets to charity. But that would make sense only if it aligns with your charitable goals and, of course, if you don’t need those funds for other uses. How else could you strike a balance between managing risk and limiting taxes? Here’s how I would answer this question. Step 1. I’d start by estimating the potential risk level among your holdings. While there’s no single litmus test, you could ask the following questions. First, how large a portion of your assets does any single holding represent? As a rule of thumb, I’d focus first on individual stocks that top 5%. Why 5%? My operating assumption is that any individual stock could experience a 50% decline during a crisis. So if a holding is limited to 5%, then a 50% drop would result in an overall portfolio impact of just 2.5%. I see that as very manageable. To be sure, stocks can certainly decline by more than 50%, but I view this as a reasonable figure for risk management. While I worry most about the risk posed by single stocks, it’s also important to examine the overall composition of your portfolio. That’s because, counterintuitively, a portfolio of 30 stocks could end up being riskier than a group of just 10. Harry Markowitz, the father of Modern Portfolio Theory, explained why. In his initial work back in the 1950s, Markowitz used railroad company stocks to explain the concept of diversification. There’s nothing inherently wrong with railroad stocks, Markowitz explained. But if a portfolio consists of only railroad stocks, then that would be a problem—because companies in the same industry are often impacted by the same economic factors. In other words, a portfolio consisting of a large number of holdings might only appear diversified, so it’s important to look under the hood. Another risk factor to consider: Do you work for a public company and own the company’s stock? If so, that would be a reason to consider diversifying more quickly (within the permitted time windows). What if you own only mutual funds or ETFs? Diversified funds tend to be less risky than individual stocks, but that’s not always the case. The fund industry launches as many as 1,000 new funds each year, including many with very aggressive strategies. So it’s important to check each fund’s holdings. You can find that information on the fund company’s website or on a site like Morningstar (Here, for example, are the top holdings in Vanguard’s S&P 500 index fund). Step 2. Next, you’d want to estimate how much a loss might impact you. As with most questions in personal finance, there are two answers to consider: how it might affect you in dollar terms, and the degree to which a loss would simply be upsetting. Both are important. Step 3. If you determine the holding in question does represent a material risk, then you’d want to estimate the potential tax impact. Here are questions you might ask: What would the tax be if you exited the entire position? Would it push your income into the next capital gains bracket? Are there tax lots with less appreciation you could take advantage of? Do you have losses you could use to offset some of the gains? Do you expect to be in a higher or lower tax bracket next year? Step 4. If you conclude that the tax bill might be significant, what steps could you take to reduce a holding tax-efficiently? Here are strategies to consider: For starters, I suggest deciding on a target percentage for the holding. While ideally I prefer bringing any individual stock down to a 5% weighting, that figure isn’t a rule. All things being equal, the larger a portfolio, the more risk you can afford. After deciding on a target percentage, the simplest approach would be to set up a long-term sale plan—like dollar cost averaging but in reverse. Suppose you’d like to sell 1,200 shares of a given stock. You could sell 100 shares each month for twelve months. You’d do that regardless of whether the stock happens to be up or down that month. That 12-month schedule isn’t a rule. If your holding is very significant, you might opt for a longer timeframe. On the other hand, if you feel the stock has a particularly highflying valuation, you might choose a quicker pace. The key, in my view, is just to get started. As the writer Carveth Read wrote, “it’s better to be roughly right than precisely wrong.” Selling a stock down over time is the simplest way to reduce risk, but it’s hardly the most tax efficient. Another approach that’s been gaining in popularity is known as a 351 exchange fund. With a 351, the idea is that a group of investors, each with their own portfolios of appreciated securities, come together and collaborate to diversify their respective holdings. To provide a simplified illustration, imagine two investors, each with a concentrated holding, one in Microsoft and the other in Apple. Each would benefit by diversifying, and that’s what a 351 exchange fund allows. Each would contribute their respective shares into a common pool that would then hold some Apple and some Microsoft. This new investment would be structured as an ETF, and each investor would be issued shares proportional to the size of their contribution. Importantly, the initial creation of a 351 fund doesn’t entail any tax. Taxes are due only when an investor later sells shares of that ETF. This is a simplified example. In reality, a 351 exchange fund would hold many more than just two holdings. They’re actually required to meet various diversification requirements. As a result, investors in 351 funds may end up feeling sufficiently diversified and thus comfortable holding their fund shares for the long term. That would make this strategy potentially the most tax-efficient way to manage portfolio concentration risk. This is just an overview, though. If you’re interested in 351 strategies, I suggest further research. In July, The Wall Street Journal discussed these funds in some detail. In addition, a firm called Alpha Architect, the largest player in this area, has a number of helpful explanatory videos on its site.   Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.
Read more »

“Gerontocracy” in America

Chris Rush  |  Aug 6, 2026

"I’ll not render an opinion of a book that I have not read, but several age impaired presidents and numerous lawmakers are a fine argument for age limits. Otherwise, like Mark and David write below, it’s no surprise that based on wealth and numbers, we boomers remain a powerful voting bloc."
- DAN SMITH
Read more »

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Manifesto

Aug 12, 2026

NO. 8: RETIREMENT may be our final financial goal, but we should always put it first. Why? It’s easily our most expensive goal, so it takes decades of savings and investment gains to amass enough.

think

Aug 13, 2026

DIVERSIFICATION. While diversifying is important with bonds, it’s crucial with stocks—and involves investing in hundreds and perhaps thousands of companies from a host of market sectors and countries. If we don’t diversify, and instead buy a handful of stocks or a single sector, there’s a danger we’ll take the risk of stock investing—without getting the reward.

act

Aug 12, 2026

GET YOUR CHILDREN age 18 and older to draw up a health care power of attorney, specifying that you can make decisions on their behalf if they become incapacitated. If they have an accident—and you have no power of attorney—you may be unable to make medical decisions for them or even learn basic information about the state of their health.

Truths

Aug 11, 2026

NO. 33: MOST INVESTORS trail the market averages. That’s true whether a market is considered efficient or inefficient. Before investment costs, we collectively earn the results of the market averages. After costs, we must inevitably earn less. In fact, investors—as a group—will trail the market by a sum equal to the investment costs they incur.

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Manifesto

Aug 12, 2026

NO. 8: RETIREMENT may be our final financial goal, but we should always put it first. Why? It’s easily our most expensive goal, so it takes decades of savings and investment gains to amass enough.

Spotlight: Advisors

Off the Hook

Michael Flack   |  Apr 2, 2022

ONLINE INVESTMENT advisor Personal Capital offered me a $25 Amazon gift card to open an account and then link it to one of my existing financial accounts worth more than $1,000. As a bonus, it also offered a complimentary financial checkup.
I duly signed up and linked one financial account. I then dodged the complimentary checkup and subsequently used my newfound wealth to purchase a portion of a good-enough HP computer.
I thought I was home free until I inadvertently answered a phone call from a member of my “Personal Capital team,” who again offered me the complimentary financial checkup.

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Personal Touch

Andrew Forsythe   |  Aug 2, 2021

I’M 69 YEARS OLD and so have spent most of my life dealing with people—and businesses—in person. That said, I’ve loved and greatly benefited from the internet revolution and appreciate its marvels in a way that only a person who lived in the “before” period can. I’ve been thinking a lot about this recently, and about how important it is—or isn’t—to have face-to-face relationships with the people I do business with.
For many years,

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Getting Rolled

Kenyon Sayler   |  Dec 18, 2023

THE SECURITIES AND Exchange Commission recently proposed that registered financial advisors be compelled to act as fiduciaries when recommending rolling over 401(k) money to an IRA. Whether this rule gets adopted or not, plenty of advisors are eager to help investors with the issue.
Indeed, as I approached retirement, a number of advisors contacted me about rolling over my 401(k). Of course, these advisors also offered to manage my funds for a fee, usually around 1% a year of assets.

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For Richer or Broker

Ken Begley   |  Aug 14, 2023

I’VE SEEN FINANCIAL advisors do great work and I’ve seen them do poor work. Which brings me to my late father’s experience.
Dad was a heck of a small businessman. Starting in 1956, he and his partner sold and serviced radios, televisions, appliances and furniture. Forty years later, he sold the business to four of my brothers.
By the mid-1960s, Dad had accumulated what was for him a small fortune. This was the time of the stock market’s so-called go-go years.

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No TIME Left For You

Michael Flack   |  Jun 6, 2025

On my way to better things
(No time left for you) I found myself some wings
(No time left for you) Distant roads are callin’ me
(No time left for you)
– The Guess Who
It had been a while since I had been mailed the opportunity to “get guaranteed income that you can’t outlive,” “preserve your capital,” and most importantly “enjoy a complimentary dinner.” I was concerned that there might have been some sort of cosmic shift away from financial planners who charge 1% of assets or even worse that my name had fallen off the free steak mailing list.

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Staying Wealthy

David Powell   |  May 24, 2021

A CLOSE FRIEND’S LONG career in the motion picture business recently came to an end when the studio eliminated her job. Even before the pandemic, the industry was changing, so she wasn’t surprised or, for that matter, especially sad about getting laid off. She was lucky to receive a good severance package and is now ready to do something different. But finding the right job will likely take time, so carefully managing her cash through the transition period is crucial.

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Spotlight: Forsythe

Saved by a Crash

Andrew Forsythe   |  Sep 23, 2020

THIS IS THE STORY of a bitter life lesson that taught me two things: the desirability of managing my own investments and the perils of putting almost all my eggs in one basket. In the late 1980s—and early in our marriage—my wife and I were busy raising four kids, while also managing two demanding careers. Our dream was to build a beautiful house on a large wooded lot that we owned in the hills west of Austin, Texas. We had already hired an architect, who was drawing up the plans, and we expected to pay for the house from our stock portfolio. When I graduated from law school, I was fortunate to have a few stock market investments, courtesy of my parents, who were firm believers in working hard, saving and investing. This was back before the internet, the explosion of low-cost brokerage firms and the popularity of index funds. In those days, it was common to use a stockbroker, the old-fashioned kind who charged hefty commissions and did all the trading for you. We lived in a different city from my parents, so I needed to find a stockbroker on my own. I wasn’t sure quite where to begin. I finally decided to call up the only rich guy I knew and ask him who his broker was. The rich guy’s broker was, by all accounts, very reputable. He was a partner in a big brokerage firm, with a fancy office in a skyscraper downtown. To my inexperienced mind, he really knew his stuff. Between the kids and my career—I was working 60 hard and stressful hours a week—I had neither the time nor the interest to worry about our investments, so I was content to have my new broker take care of them. It soon became clear that…
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The Path Not Taken

Andrew Forsythe   |  Oct 1, 2020

IN AN EARLIER ARTICLE, I wrote about a catastrophic stock market loss that taught me—the hard way—about the benefits of diversification and the importance of managing my own investments. That loss derailed our plans to build a large and expensive home in the hills overlooking Austin, Texas. We were heartbroken at the time. This had been our dream for several years. But it’s funny how life works out sometimes—and it may have been the best thing that ever happened to us. As we planned our dream home, I knew it was going to involve taking on a huge mortgage, but that gave me no pause. I was young, ambitious and already accustomed to long, stressful hours at my job. It never dawned on me that I was putting myself on a path that I’d likely feel compelled to stay on indefinitely, or at least until that big mortgage was finally paid off. And the mortgage was only part of it. A big expensive house also costs more to maintain, the property taxes can be a huge burden and it can propel you into a more expensive overall lifestyle. That last factor is worth special consideration. When you buy or build a home, you aren't just acquiring a place to live. Rather, you’re becoming part of a neighborhood, a school district, and a group of friends and neighbors. When that’s all on the upper end of the wealth scale, your finances will be affected in myriad ways. Even if you can resist the peer pressure, you’ll feel it through your kids, who will be much more susceptible. You’re basically locking yourself into a way of life. Consoling yourself with the thought that you can always change trajectory by selling the house? That’s much easier said than done, especially when the kids are…
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Paid to Play

Andrew Forsythe   |  Feb 16, 2022

IT SEEMS LIKE EVERY month or so, one of our kids—and, for the married ones, that includes spouse and little ones—is on vacation. A week or two in Cabo or Cozumel, a road trip out west, or a jaunt to some other interesting destination is commonplace. How is this possible? One of the reasons, I believe, is because they don’t work for themselves. Instead, they work for big institutions, such as corporations, universities, school districts and large nonprofits. I left my position as a prosecutor with the district attorney’s office in 1983, when I got a job offer from a two-man law firm. I happily remained there until I retired in 2017. I took a lot of pride in our firm and enjoyed the independence that came with being our own bosses. But the burdens of running a small business were significant. While my partners and I helped each other in numerous ways, we had an “eat what you kill” system. My income came only from the clients I signed up and personally represented. There was no sharing among the partners. This meant that if I wasn’t working, I wasn’t earning. As I often explained to my dear wife, if we took a vacation, it was a double whammy. Not only did we have the cost of the vacation itself, but also for those days when I was away from the office and not hustling, there was less income—and no new clients. With four kids to get through college, we didn’t take many vacations. Moreover, since my partners and I each did our own work, there was no one to keep up with it while we were gone. Upon return, there were always several hectic days of catchup. But our kids and their spouses enjoy a different life. They have…
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Well Rewarded

Andrew Forsythe   |  Jul 25, 2021

AS JULY BEGAN, there was happy news for Chase Freedom Visa cardholders like me: One of the categories for 5% rewards this quarter is grocery stores. We spend a lot on groceries, which means I’ll get a nice cash reward from Chase. I’m a big believer in credit card cash rewards for two reasons. First, of course, there’s the reward money. The second reason is psychological: Credit card companies are notorious for the outrageous interest and fees they exact from anyone who doesn’t pay off every nickel every month, so I find having them pay me money to be extremely satisfying. Different cards have different rewards schemes. To maximize your cash back, it can be worthwhile to have more than one credit card—at the cost of a bit more complexity and hassle. I currently use three cards. The aforementioned Chase Freedom Visa normally pays a meager 1% reward, but also has the rotating quarterly category where certain types of purchases earn 5% on up to $1,500 in quarterly purchases, potentially giving me a $75 quarterly reward. I pay attention to the current category and use the Chase card for those purchases. I have a Bank of America Cash Rewards Visa which likewise pays 1% but lets you choose an ongoing category that pays 3%. I selected online purchases. I’ve discovered that ordering groceries online and then picking them up curbside—a habit we acquired during the pandemic—qualifies as an online purchase, so I use the Bank of America card for that. Unless, of course, the Chase card’s 5% quarterly category includes groceries. Finally, I have a Citibank Double Cash Mastercard, which pays 2% on all purchases, all the time. I use that for everything else. It can add up: In 2020, I earned more than $1,100 in cash rewards from the…
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Retirement Dreams

Andrew Forsythe   |  Feb 20, 2024

THIS ISN’T ANOTHER article about dreaming of retirement. Rather, it’s about dreaming in retirement. I retired in 2017 after practicing criminal law in central Texas for almost four decades. It could be stressful at times. Before that, there were long years in college and law school. College was relatively easygoing and enjoyable in the laid-back Austin of the 1970s, plus my major was sociology—a world apart from those in pre-med, engineering and the like. The University of Texas School of Law was, by contrast, a rude wake-up call. The professors and the material were demanding, to put it mildly. For as long as I can remember, I’ve had recurring dreams with the same theme: I’m unprepared for something, or lost in a new environment, or somehow thrust into chaos and disorganization. A frequent dream involves starting off at a new school where I don’t know the location of any of my classes and I’m already way behind on the assignments. Alternatively, I’m in court and I’m totally unprepared for my case. Now that I’m retired and living the easy life, you’d think those dreams would disappear. But they haven’t. Not content to be unprepared locally, I recently dreamed that I’d somehow become attorney of record on three cases in Florida. You guessed it: Trial was about to start on one case and I was unprepared. What seems even more odd is that, during my waking hours, I rarely think back on my working life. I have many things on my mind, but my old law practice isn’t one of them. Maybe it’s genetic—or maybe it just goes with the profession. My dad was a Maryland farm boy who in the 1920s made it to college and then law school. He practiced in Dallas well into his 90s and loved it.…
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What’s Cooking?

Andrew Forsythe   |  Sep 10, 2022

COUNTLESS ARTICLES on HumbleDollar speak of the need to save, especially for those early in their careers, so they can eventually retire in comfort. The powerful effect of compounding means that the sooner those dollars are saved and invested, the greater the sum down the road. But where can folks find those extra savings? Let me offer a suggestion: learn to cook. The amount Americans of all income levels spend on eating out, whether it’s sit-down restaurants, fast food places or takeout, is staggering, according to studies cited by Richard Quinn in an article last year. Americans spend an average of $787.28 a month on meals outside the home, found one survey. The timing of this screed may seem insensitive. After all, the restaurant industry was decimated by the pandemic and its underpaid workers were hit hard. I have nothing against the restaurant industry. I worked as a waiter during college. Two of our kids have also worked in restaurants, and my niece is part owner of two successful restaurants and bars. But I have an old-fashioned view of restaurant meals. Eating out is a treat, an occasional indulgence, not a several-times-a-week habit. I’m not saying to give it up entirely. For those retirees and others who enjoy it and can afford it, by all means indulge. Among those who have a future to save for, however, I’d suggest calculating what dining out is costing you and then look to reduce that sum. The total tab can be quite surprising. Years ago, my wife checked the bank account of one of our kids, then in college. In one month, the cost for restaurants was around $600. That was a shocking amount even to our dining-out college student, who promised to reform. You don’t have to be a gourmet chef to…
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