What is tax-loss harvesting and how does a boutique advisory firm do it differently from an automated investment platform?
Tax-loss harvesting is the practice of selling investments in a taxable account that have declined in value to realize a capital loss, which can offset capital gains elsewhere in your portfolio or, up to $3,000 per year, reduce ordinary income directly. Unused losses carry forward indefinitely.
In concept the strategy is simple. In execution, the quality varies significantly depending on who or what is managing the decisions.
Automated investment platforms run loss-harvesting algorithms that trigger on price declines without any context about your broader situation. The algorithm does not know that you are targeting a specific income bracket for a Roth conversion this year, that large RSU grants are vesting in December, that you have already sold a similar fund in another account and may be approaching a wash-sale violation, or that you need to stay below a Medicare IRMAA threshold. It executes the mechanical action without the planning context that determines whether harvesting a particular loss actually helps you.
A boutique advisory firm integrates tax-loss harvesting into your complete annual tax picture: your bracket position, your Roth conversion target, your projected equity income, your IRMAA thresholds, and your estate situation. Losses are harvested when they meaningfully reduce your overall tax liability, not simply when a holding drops. The wash-sale rule, which prohibits repurchasing the same or substantially identical security within 30 days of a sale, is managed across all accounts. For high-income clients in California with equity compensation events, Roth conversion goals, and multiple account types, this coordinated approach can produce meaningfully better after-tax outcomes than automated harvesting performed without context.
How do I decide which account to take income from in retirement? Should I draw from my IRA, my Roth, or my taxable accounts first?
The order in which you draw from different accounts has a direct, measurable impact on your lifetime tax bill, your Medicare premiums, how long your portfolio lasts, and what you eventually leave to your heirs. This is one of the most consequential and most frequently defaulted (rather than deliberately decided) questions in retirement planning.
The general framework: taxable accounts (brokerage accounts holding stocks, bonds, or funds) are often drawn on first, because qualified capital gains and dividends are taxed at preferential rates, and selling in a taxable account can produce harvestable losses alongside gains. Traditional IRA and 401(k) assets are generally next, since every dollar is taxable as ordinary income and required minimum distributions start at age 73 (or 75 for those born January 1, 1960 or later). Roth accounts are typically drawn on last, since qualified withdrawals are completely tax-free and Roth accounts have no required minimum distributions during the owner's lifetime.
However, taxable-first is a starting point, not a rule. In many years it makes sense to take more from the IRA than the minimum, filling a lower bracket before RMDs force larger distributions at higher rates. Some years a Roth withdrawal makes sense to avoid triggering a Medicare surcharge. The right sequence changes each year based on your total income picture.
What does it mean to work with an Ed Slott Elite IRA Advisor and why does that matter?
Ed Slott's Elite IRA Advisor Group is one of the most rigorous continuing education programs for financial advisors focused on IRA and retirement distribution planning. Advisors in the group receive specialized ongoing training on IRA distribution rules, beneficiary planning, Roth conversions, inherited IRAs, required minimum distributions, and the interaction between IRAs and other income sources. For clients with $1 million or more in IRA or 401(k) assets, the decisions surrounding those accounts can have a six-figure impact on lifetime taxes. Working with an advisor trained specifically in IRA distribution planning reduces the risk of costly, often irreversible mistakes.
My IRA is my largest asset. What are the biggest mistakes I should be trying to avoid?
IRA distribution mistakes are among the most consequential and frequently irreversible errors in retirement planning. The most common include rolling company stock to an IRA when the NUA strategy would have been more tax-efficient; naming the wrong beneficiary or failing to update designations after life changes; missing required minimum distributions and incurring the 25% excise tax; taking distributions in the wrong sequence relative to other income sources; and doing Roth conversions at amounts that trigger Medicare premium surcharges. For clients with $2 million or more in traditional IRA assets, getting these decisions right can represent hundreds of thousands of dollars in lifetime tax difference.
What is a Qualified Charitable Distribution and how can it reduce my taxes in retirement?
A QCD allows people age 70.5 or older to transfer up to $111,000 per year (2026, indexed annually) directly from an IRA to a qualified charity without the distribution appearing as taxable income. Unlike a regular cash donation, which is counted as income and only benefits you if you itemize, a QCD never appears as income at all. Most retirees do not itemize because their standard deduction exceeds their itemized total, so regular charitable gifts produce no tax benefit. A QCD bypasses that limitation entirely. For retirees subject to RMDs who give to charity regularly, a QCD can simultaneously satisfy the RMD requirement, lower adjusted gross income, reduce the taxable portion of Social Security, and lower Medicare IRMAA premiums. It is consistently one of the most tax-efficient charitable strategies available.
My spouse passed away and I've heard my taxes will be much higher now that I'm filing alone. Is that true?
Yes, and this is one of the most underappreciated financial consequences of widowhood. In the year of your spouse's death, you can generally still file as married filing jointly. Beginning the following year, unless you have a qualifying dependent, you file as single. Single tax brackets are approximately half the width of married filing jointly brackets, meaning the same taxable income can push you into a noticeably higher marginal rate. For surviving spouses with significant IRA balances, pension income, Social Security, or investment income, the tax cost of the same dollars can increase meaningfully after the transition. Proactive planning, including Roth conversions in the year of the spouse's death while joint filing is still available, can reduce the long-term impact. This is a time-sensitive planning issue that benefits from immediate attention.
What is an IRMAA surcharge and how does it relate to my planning decisions?
IRMAA stands for Income-Related Monthly Adjustment Amount. Medicare Part B and Part D premiums are based on your modified adjusted gross income from two years prior. If your income in a given year exceeds certain thresholds, your Medicare premiums two years later will be significantly higher. For 2024, surcharges begin at income above $109,000 for individuals and $218,000 for married couples filing jointly. Large Roth conversions, IRA distributions, capital gains realizations, or any event that significantly raises income in a given year can trigger IRMAA for the subsequent Medicare year. Managing this is one of the more nuanced aspects of retirement tax planning, and it affects how we size Roth conversions and other income events each year.
How does Tomren & Sullivan approach tax planning differently from a firm that only manages investments?
Most investment management firms focus on generating returns and manage taxes reactively: they consider tax implications after making investment decisions rather than as an integrated input. Our approach treats tax planning as an ongoing, year-round discipline integrated with every major financial decision. Each year we project your total taxable income from all sources, identify bracket-filling opportunities for Roth conversions, evaluate tax-loss harvesting in the context of your full income picture, assess QCD eligibility for charitable clients, review beneficiary designations, and coordinate with your CPA or tax professional. The goal is to reduce your lifetime tax bill deliberately, not just to minimize this year's return.
