Tax Smart

WealthE, in partnership with Institutional Intelligent Portfolios™, engages sophisticated technology, automatically rebalancing and employing a tax-loss harvesting strategy as part of an integrated process. As a result, an automatic process for tax-loss harvesting offers you the possibility of improving your net on tax returns over time.

How does it work? If an automated data check determines that rebalancing is beneficial and that a tax-loss harvesting opportunity is also available, the trades will be auto-executed.

Tax-loss harvesting involves selling a security at a loss, and using the funds towards a similar but not “substantially identical” security. The process allows client portfolios to retain a similar market exposure while generating deductions for federal income taxes that may be used to offset recognized capital gains and up to $3,000 of ordinary income a year.

The proprietary technology employed continually monitors and potentially prevents wash sales through the use of two similar but not identical ETFs for each asset class (a “Primary ETF” and a “Secondary ETF”). ETFs selected for the program track different underlying indexes. When the price of one ETF is large enough to warrant a sale to capture a loss, the other ETF in the asset class is purchased to maintain the asset class market exposure.

The goal is to help reduce your net federal income tax burden by capturing tax-deductible capital losses. Tax-loss harvesting may help you to offset taxable gains with taxable investment losses, lowering your tax bill and potentially leaving you with more to invest and grow.

Of course, you have the option of whether or not to enroll in automated tax-loss harvesting, and there is no additional fee for signing up.