Compound

We’re thrilled to welcome three seasoned leaders as we continue empowering next-gen advisors to deliver a modern planning experience that today’s clients deserve. Meet Eric Flynn, CFA, CPA, our new EVP, Head of Wealth Management, Marc Primiani, our General Counsel, and Brent Myers, who’s leading the charge as Head of Advisory Operations. Adding accomplished leaders like Eric, Marc, and Brent strengthens our commitment to supporting next-generation advisors who want to grow, maintain autonomy, and serve their clients with the backing of leadership that knows the industry but isn’t bound by the status quo. For our clients, these leaders bring decades of expertise serving entrepreneurs, professionals, families, and retirees—at every stage of their financial journey. We’re here to help you protect and grow your wealth with personalized solutions designed to meet your unique needs. “Eric, Marc, and Brent bring invaluable experience and strategic insight to Compound Planning at a critical time in our growth journey,” said Christian Haigh, Co-founder and CEO of Compound Planning. “Their expertise and leadership further validates the value that our AI and tech-enabled platform brings to advisors and their clients. We are thrilled to have them onboard as we continue to build the operating system for 21st-century wealth management.” With over $2B in AUM and recognition as one of the nation’s Top RIAs, we’re transforming how wealth management services are delivered. Want to learn more? Head over to the newsroom for all the details: https://lnkd.in/ePSJNPVb

Options requiring $50,000 to exercise may incur $1,000,000 in taxes. But waiting could cost you even more. Here's how to navigate this tricky situation: → Exercising options early starts the long-term capital gains clock, potentially reducing your future tax rate upon sale from 37% to 20%. However, you risk a large out-of-pocket tax bill if the IPO doesn't happen. → If your strike price is low compared to the 409(A) value, exercising could incur the largest immediate tax hit. This strategy requires careful consideration of your risk tolerance and liquidity. → A more conservative approach is exercising options with strike prices close to the current valuation, minimizing your taxable spread. With the right strategy, you can potentially save millions in taxes and maximize your future wealth. Remember: This stuff is tricky (not rocket-science, but tricky). Consider talking to a tax or financial advisor. If you have any questions, Compound can help.

Join our next Compound Conversation about the current State of the Market. 📆 Date: Wednesday, October 23rd 🕚 Time: 11am PT / 2pm ET Stephen Dean, CFA and Tara Shulman will explore key developments so you can cut through the noise of recent economic and market activity and focus on what matters most. Steve and Tara will cover: → public markets → private markets → the macro economy → audience questions → and more RSVP now → https://lnkd.in/e2zFpnAe

Problem: your income is too high for direct Roth IRA contributions. Solution: Backdoor Roth Strategy. Here's how: This strategy can be a powerful tool for high earners looking to access the benefits of tax-free growth. Let's break down the steps and important considerations: → Step 1: Make a non-deductible contribution to a traditional IRA. → Step 2: Convert the traditional IRA to a Roth IRA. → Step 3: Pay taxes on any earnings between the contribution and conversion. While these seem straightforward, there are critical factors to keep in mind: → The "pro-rata" rule: If you have other pre-tax IRA balances, this rule can significantly impact your tax liability, and it's essential to understand how this applies to your situation. → Timing matters: Consider converting soon after contributing to minimize taxable earnings, as this can help reduce your tax burden. → Record-keeping is crucial: Maintain meticulous records of non-deductible contributions for tax purposes because this documentation will be vital when reporting your conversions. Finding the right balance between pre-tax and Roth savings is critical to optimizing your current and retirement tax situation.

When you make partner, you stop receiving a regular paycheck. Here's how to maintain stability with your income now that it’s tied to firm performance: → Align your monthly expenses with your distribution schedule. → Build an emergency fund to cover at least 6-12 months of expenses. → Keep a personal line of credit to bridge gaps when your income dips. If your firm offers monthly or quarterly draws, use them to spread your income more evenly. When you receive higher distributions, have a plan for the excess cash: → Build your emergency fund → Catch up on retirement savings → Pay high-interest debt like student loans BEFORE increasing your lifestyle spending. Would you add anything else?

Pre-tax contributions seem like the obvious choice for high-earning attorneys. But here's why post-tax contributions are a game-changer for your retirement strategy: → Tax diversification: By having both pre-tax and post-tax accounts, you're giving yourself options. This flexibility allows you to strategically withdraw from different account types based on your tax situation each year in retirement. → Hedge against rising tax rates: Many financial experts are predicting higher tax rates in the future. By contributing to a post-tax account now, you're essentially locking in your current tax rate. → No Required Minimum Distributions: Unlike IRAs, Roth IRAs don't force you to start withdrawing at age 73. This means your money can grow tax-free for longer, potentially becoming a powerful estate planning tool. → Backdoor Roth conversions: Even if your income is too high for direct Roth IRA contributions, you're still in luck. The "backdoor" Roth conversion strategy can still give you access to these benefits. Find out how in our new Manual about retirement planning strategies for lawyers. https://lnkd.in/eB6jmMtM

Here’s what you need to know if you’ve ever thought about using an LLC for angel investing: When properly maintained, an LLC protects your personal assets from business debts and lawsuits. But beyond asset protection, LLCs offer some other key advantages to angel investors: → Flexible taxation: Choose between pass-through, C corp, or S corp tax treatment → Expense deductions: Write off business-related costs like meals and travel → Privacy: Invest under a different name to avoid individual listing on cap tables → Brand building: Use a business name to create awareness for your investing activities → Group investing: Simplify co-investing with friends or angel groups And while LLCs offer substantial benefits, they also come with costs and administrative responsibilities, such as: → Filing + ongoing state fees → Additional paperwork and record-keeping → Potential need for professional assistance (e.g., lawyers, accountants) → Time spent on administrative tasks For many, investing as an individual might be sufficient.

As a partner, treating your year-end distribution as a bonus is a huge mistake. Here's how to approach it to maximize your wealth: First, resist the temptation of seeing it as an unexpected windfall and treat it as an integral part of your annual compensation. The key is to allocate your funds wisely across three essential "buckets": → The "past" bucket: Use this to shore up your financial foundation. Pay off any lingering debts or bolster your emergency savings if needed. → The "present" bucket: Cover your current living expenses, but keep this lean. Remember, this distribution needs to last. → The "future" bucket: This is where the real wealth-building happens. Allocate a significant portion for long-term goals like retirement, a home purchase, or your children's education. Also, set aside a substantial portion for taxes, as your year-end distribution counts as taxable income. Your final draw may also have significant deductions, such as retirement plan contributions or deferred compensation, which can impact your take-home amount. Lastly, consider investing in yourself by using some funds for professional development courses or coaching, which can pay dividends in your future earning potential and career trajectory. Learn more from our comprehensive Manual on navigating the financial transition from associate to partner. https://lnkd.in/eq2JV9cB

After an IPO, many people want to give back. Here’s a strategy to gift your stock more tax-efficiently than selling: Donate long-term, low-basis, publicly traded shares to avoid capital gains tax on the appreciation in the donated shares. In addition, you can deduct the donation from your income, reducing your taxable income. Here’s what else to keep in mind: → Long-term: You need to have owned the asset you are donating for at least a year to get the full tax benefit. → Low-basis: Donate the stock you bought with the lowest cost basis and highest current value. → Public: Many charities can only accept publicly traded stock (e.g., listed on NASDAQ or NYSE). → Stock: You can donate shares, not options. Employee stock options usually are not transferable and can't be donated to charity. When compared to selling your company stock and donating the cash to the charity, which creates a taxable event, this strategy is more tax efficient and avoids a tax hit. Learn more from the Manual. https://lnkd.in/e82FWhuc

Stephen Dean, CFA is back with his monthly State of the Market commentary, covering recent market events and why they matter. Q3 at a glance: → The Fed cut rates by 50 basis points on September 18 → The Core PCE index was up 2.7% in August from a year ago → Unemployment ticked up to 4.2% from 3.7% a year ago → Stocks ended Q3 up across all indices, many hitting record highs → The rate cut led to a strong rally across the bond market You can read Steve's full commentary about September and Q3 here: https://lnkd.in/ejiHyMmY