A retirement plan established by employers, including self-employed individuals like sole proprietors and partnerships. The SEP is an IRA-based plan into which employers may make tax-deductible contributions on behalf of eligible employees, including the business owner. The employer is allowed a tax deduction for the contributions, which are made to each eligible employee’s own SEP IRA account. Typically, a business owner will establish and maintain a SEP plan with the aid and advice of their CPA.

The Exchange traded funds (ETFs) recommended in Guided Wealth Portfolios are passive investments securities that replicate the performance of an index representing a certain asset class. ETFs trade on an exchange and are bought and sold like stocks. ETFs usually have a lower expense ratio than actively managed mutual funds. The ETFs that Guided Wealth Portfolios invests in are large, liquid investments which track the benchmarks that LPL Research has identified as being appropriate for the portfolio.

An individual retirement plan that bears some similarities to the Traditional IRA. The biggest distinction between the two is how they are taxed. Roth IRAs are funded with after-tax dollars; the contributions are NOT tax deductible. However, so long as the funds remain in a Roth IRA for a minimum of 5 years OR until the owner reaches age 59 ½ — whichever is LONGER – then all earnings and withdrawals from a Roth IRA are income tax free. See IRS Publication 590 for more details.

TAn employer-sponsored retirement plan that allows employees to defer a percentage of income to an investment account. The amount deferred is usually not taxable to the employee until it is withdrawn or distributed from the plan. If the plan permits, an employee can make 401(k) contributions on an after-tax basis. These accounts are known as Roth 401(k)s, and these amounts are generally tax-free when withdrawn. Employers may choose to match some or all of the employees contributions as an incentive to their employees to save for their own retirement.

If an investment experiences a loss, we may sell it to offset taxable gains in your portfolio. The investments sold are replaced by similar investments to maintain your asset allocation, so you get tax benefits while keeping a properly diversified portfolio. FutureAdvisor monitors each of your taxable account holdings daily, looking for positions with at least $500 and 1.5% in harvestable, taxable losses given the current market prices of the ETFs. To harvest taxable losses, we sell the tax lots with unrealized losses and purchase a preselected similar index fund within the same asset class. In this way, we bank the losses for tax purposes without changing the overall portfolio asset allocation. At the end of the year, we’re able to use these taxable losses to offset your gains for the year and/or ordinary income. Our algorithm also ensures that we do not incur wash sales in this process. References to tax strategies that Guided Wealth Portfolios investment management considers in managing accounts should not be confused with tax advice. LPL Financial does not provide tax advice. You should consult with your tax advisors regarding your individual situation.