4 Ways We Helped Clients Last Year [Success Stories]

Being a financial planner for high income 30-50 year olds is extremely fun.

We get to add so much value to our clients lives through tax planning, business planning, investment planning, etc.

So today, I want to share with you 4 of the best planning stories from last year:

(Note: all of these are slightly changed to keep their lives private)

High profit business owner with no planning before

We had a new client join us last year: they live in California, own a great, high profit business (not a service business), and had done zero tax planning before. Coming in here were the issues we saw:

Non S Corp - this was an issue for 2 reasons:

No QBID because they had no wages as a sole business owner. With over $1mil in profit, they were getting a $0 deduction. Once they add in wages, they get the lesser of 50% of w2 wages or 20% of business profits. Moving to S Corp means an added deduction of over $150,000. This leads to huge tax savings.
Since they were a single member LLC they were not elected into PTET. Moving to S Corp means they could elect into PTET, pay their state taxes through the business (which are a lot in CA). This means another added deduction of over $70k. The combination of these two are over $100k of tax savings alone.

Not paying quarterly tax payments

This is wild, I know. But they were working with the cheapest tax team they could, which was fine when they first started, but not anymore (we obviously hired a new tax team for them). We helped them understand safe harbor, what they will owe above, etc. and this will reduce over $10k of underpayment penalties.

No retirement accounts setup

They did not know they could setup their own retirement account (and spouse was maxing out their Roth 401(k) in this tax bracket), so we helped them setup a Solo 401(k) and max it out at $70,000. This is a huge added deduction, and since they used a solo, they also get to do the backdoor Roth IRA each year.

Added backdoor Roth IRA for husband and wife

Invested cash & got them out of holding so much as they were paying a 50% tax rate on all the extra cash they were holding.

The combination of all of these is hundreds of thousands in value, each year. We honestly have tons of clients per year join us in a very similar situation.

Dual, high income household with lots of ISOs

We helped a household that needed planning around their ISOs. They had been working at the company for a long time and built up a ton of unexercised stock options. This is a great situation to be in, but the tax planning was complex for them.

Coming in, their plan was to exercise all before they left.

This was Q4 last year and the plan was to leave by the end of Q1 this year.

If they had exercised all the options, they would have had over $30k of AMT tax to pay. However, we did the analysis, and realized that if they spread this out strategically over 2 years, they would no AMT.

How?

With a large RSU vest happening in 2025, they had more room. So they exercised some in 2024, to stay under the AMT amount, then in 2025 exercised closer to 65% of them because of the added RSUs.

This meant a difference of $30k+ of AMT saved.

Tax planning on a sale

A client of ours was getting ready to sell their business. They are very charitably inclined and typically give $50k to $100k a year via cash (not a ton in taxable investments so far). We knew that and brought up the idea of a DAF and donating part of their business before the sale. This was something they never heard of.

Most think you can only donate public stocks, but this is not true. Before a sale (and before an LOI is in place), you donate part of your company to a donor advised fund. This sale was very large and they were able to donate well over a $1mil of company stock.

This means they avoided:

$1mil of capital gains avoided (20% LTCG, 3.8% NIIT, 13.3% state tax = $371,000 of tax savings
$1mil deduction against income avoided (37% + 13.3% state) = $533,000 of tax savings

This means they gave $1mil to a donor advised fund for about $100,000. Then these funds can get invested, grow tax free, and be given tax free to charities in the future.

Almost every client of ours plans to do something similar at the sale comes to fruition. Tax planning for the win here.

Mega Backdoor Roth

This is honestly just a story for tons of our clients.

Most people coming in to us have no idea about the Mega backdoor Roth. Oftentimes, they are contributing to Roth because they like the tax free benefit.

But the Mega backdoor Roth 401(k) opens up a lot of great things.

You can max out your pre-tax 401(k), HSA, etc. and use all the pre-tax options you have.

This is something that makes sense for most of my clients as they are in the 35-37% brackets and also typically in high tax states.

Then once they use all those options, they can fill the remaining 401(k) room via the mega backdoor. For some, this is through their 401(k) at work. For others, it is through their side hustle and a solo 401(k). Regardless, they get to use the backdoor Roth IRA and mega backdoor Roth 401(k) and stash away a ton of added tax free dollars while still lowering taxable income today as much as possible.

Great financial planning can make a huge difference in your life and I hope these stories help you understand that!