Issue link: https://resources.envestnet.com/i/1532842
Example 1: Portfolio transition with or without tax management Tax overlay allows you to significantly reduce short-term capital gains for a low tax management fee, with the trade-off being an increase in the tracking error. *This is a hypothetical example for illustrative purposes only and not based on actual account information. This scenario is assuming an income tax rate of 43.4% and a capital gains rate of 23.8%. Account Value: $11,649,130.00 Example 2: Risk optimization at the account level A simple instruction from the manager to trim a position might result in different trading results at the account level Year 1 Tax Budget Client Net Realized Short Term Gains Security Holding Status $376,234 $0 $0 $0 $0 Long-term gains Long-term gains Short-term gains Short-term gains Short-term gains No Tax Management $0ST/$0LT $0ST/$500K LT $0ST/$1MM LT $0ST/Unlimited LT A B C D E Net Realized Long Term Gains Short Term Capital Gains Budget $1,625,776 $0 $500,000 $1,000,000 $1,625,000 $0 $0 $0 $0 $0 Weighted Account Tracking Error Long Term Capital Gains Budget .02% 2.81% 1.80% 1.22% .80% None or Below At Budget None or Below None or Below None or Below First Year Tax Bill Due To Transition Account Level Results $550,220 $0 $119,000 $238,000 $386,750 Position is sold. Client has a LT capital gain. Position maybe sold if losses are available to offset gains. If tracking error allows, position may continued to be held. Position is held for additional two weeks allowing the tax lot to mature from short term gains to long term gains. Position is sold and the risk optimizer identifies losses in the UMA to immediately harvest. Position is sold and the risk optimizer will try to identify losses throughout the remainder of the year to offset gains. Tax Management Fee $0 $11,649 $11,649 $11,649 $11,649 Potential First Year Tax Savings N/A $538,571 $419,571 $300,571 $151,821 CASE STUDY For any questions or assistance regarding Overlay Services contact an Overlay Services Specialist at (972) 996-5404 7 Tax Overlay Implementation Guide ██████████████████████████████████ Ì200001745?Î