The Tax Hack Pairing Roth Conversions With a Hedge Fund

Another thing that we do for our clients is look at, well, maybe when we're looking at to do those Roth conversions and we do those in lower income tax bracket years when they are retired, why don't we also look at investing some of the proceeds in their trust account into a tax aware hedge fund that produces ordinary income losses and exchanges that for capital gains which is taxed at a lower tax rate, and this will help them offset some of the taxes due on the Roth conversion.

And if they're not able to convert everything to the Roth IRA before their later years, for example, in their 70s or their 80s, having this tax aware hedge fund helps to consistently deliver those ordinary income losses that can then offset ordinary income from things like required minimum distributions from their pensions, from interest, ordinary income, and other ordinary income sources.