Tax-Efficient Financial Planning Strategies for High-Net-Worth Investors with Alina Osokhovska – Ep 078

When it comes to high-net-worth retirement planning, having a robust investment portfolio is only part of the equation. Without a comprehensive strategy for generating income, minimizing taxes, and protecting against volatility, you could leave your financial future and legacy exposed to unnecessary risks.

In this episode, SHP Financial’s co-founder Derek Gregoire sits down with Planning Solutions Advisor Alina Osokhovska to explore what it really means to have a complete retirement plan—not just a portfolio. Alina shares insights on cash flow management, tax diversification, and proactive planning techniques that can add significant long-term value to your financial outlook.

In this conversation, you’ll learn how a strategic mix of pre-tax, after-tax, and tax-free accounts can reduce your lifetime tax burden, how Roth conversions can help your portfolio recover in down markets, and how estate planning documents and gifting strategies can help preserve your legacy.

In this podcast interview, you’ll learn:

• Why a strong portfolio isn’t enough—and what makes a full financial plan.
• How cash flow and tax planning work together to protect your retirement income.
• Factors to consider when pulling from taxable, pre-tax, or Roth accounts.
• How Roth conversions during market downturns can unlock long-term value.
• Why annual plan reviews and updated estate documents are essential to safeguard your legacy.

Inspiring Quotes

• “We want to make sure the plan is tax-efficient so they do not overpay in taxes, the cash flow doesn’t put them in the high tax bracket and also impact their Medicare premiums.” – Alina Osokhovska

• “We don’t want to think about something bad happening to us, but it’s life and it’s better to be prepared and take care of your family, your kids, and also your assets to make sure that the wealth that you worked so hard for is transferred to the people you choose tax efficiently.” – Alina Osokhovska

Interview Resources

• Alina Osokhovska on LinkedIn
• IRA
• SEP
• Simple 401(k)
• 403(b)
• Roth IRA
• Social Security
• Medicare
• QCD

[INTERVIEW]

Derek Gregoire: Welcome, everyone, to another Retirement Roadmap podcast, brought to you as always by SHP Financial. I’m Derek Gregoire, joined by one of our lead planners here, Alina Osokhovska. Did I get that right?

Alina Osokhovska: You did.

Derek Gregoire: We’ve been working on this for a while, but it’s a tough name to pronounce. I’m not going to lie. But welcome to the show.

Alina Osokhovska: Thank you. Hi, everyone.

Derek Gregoire: Yeah. We are excited about this show because this is dedicated to a lot of folks out there in terms of what we’re going to be talking about but specifically in terms of high net-worth investors. So, if you saved more than $1 million to $2 million in your portfolio, what we’ve seen since we opened the doors back in 2003 in between Plymouth and Woburn and Hyannis, we’ve seen so many times when folks come into our firm for the first visit and clients that are listening now that know this when they first come in, they have just a portfolio, which we know is very important. But there’s a huge difference between a portfolio and a full plan, right?

Alina Osokhovska: Absolutely.

Derek Gregoire: And as we record this right now, we’re actually going through some market volatility. Here we are in mid to early 2025. And so, this timing can be better for this type of topic. So, as you listen to this show and some of the topics we discuss, I really want you to pay attention to make sure, are you getting this type of planning? Because I’m looking at a recent client we took on, they had about $5 million to $6 million in portfolio assets and I have nine pages of notes from Alina and her team of planning opportunities. And so, all I can say is very few of these notes are around the portfolio because we have a separate team of CFAs and analysts that manage our client’s portfolios and do a great job at it, especially with this volatility happening. But this is beyond that.

So, we’re assuming, and this might be a bad assumption, we’re assuming that everyone listening has a good portfolio with proper risk tolerance that are not getting, if you’re close to retirement, you shouldn’t be feeling the pain of this market as much as the market’s going down. So, we’re assuming that’s the case. Now, again, I know that’s a big assumption, but let’s say you have a strong portfolio and that’s going on. Alina, we know there’s so much more to it than that.

Alina Osokhovska: Absolutely.

Derek Gregoire: So, we’re going to get into areas such as our five areas we look at are income planning, investments, taxes, healthcare, and estate planning. I think today we’re going to focus a little bit on cash flow. We’re going to get to cashflow a little bit because in terms of… I guess we’ll start there. So, when we’re looking at taking on a client, obviously, if they’re getting ready to or in retirement, their main thing they want to start with, think of the foundation of a plan or a roadmap is, “Do I have enough?” That’s the first thing. So, take us through the steps of like, just when it comes to creating a cash flow, like where do we pull from? How do we set the accounts up? That’s the first process we want to make sure it’s taken care of.

Alina Osokhovska: Yes. That’s a really good question and it is connected to the tax planning as well because we want to make sure that it is tax-efficient so they do not overpay in taxes, the cash flow doesn’t put them in the high tax bracket and also impact their Medicare premiums.

Derek Gregoire: Exactly.

Alina Osokhovska: So, we take a look at their total portfolio, different buckets like taxable bucket. It can be brokerage account, cash account, also retirement assets like an IRA, SEP, simple 401(k), 403(b), different plans, and perhaps they have a Roth account as well. Hopefully, right? And then we take a look at all their assets. We take a look at their income needs in retirement, and we try to develop a plan that works for them.

Derek Gregoire: Yeah. And then one of the things we do here, I’m looking at page 20 of your 20-page. Looking at the notes here, we also, for this particular client that we just built out this plan for, we looked at different ways to take Social Security. So, in one instance, it’s like by taking it at a certain age versus full retirement age, which is 67 for them versus 70, the break-even point on paper might be like 78, but when you plug it into their plan, the break-even point could be like 90. So, sometimes taking it at full or a little bit early might make sense based on the plan. But then also, like Alina said, it’s really about what buckets do we pull from and when?

Well, some of that depends on where the market is. So, you want to make sure we have those buckets like safety, income, and growth, meaning assets are set aside for the proper withdrawals that you need, and then the long-term bucket is growth that you don’t necessarily need from. So, it’s all about the risk factor of each account that you have, the tax factor, what the tax ramifications and Medicare ramifications are of your withdrawals. And so, that’s like step one, right? Just having an income plan so that you, if you’re married, your spouse, you’re going to be okay. That’s step number one. That’s the foundation of any plan, right?

Well, that’s like the foundation of a house, but what do we do to protect that foundation and what’s that foundation designed to do? Well, we have to build a wall and windows and roof. And so, now we have to look at what are threats to that income. What are the threats to their portfolio? And I think the first thing we look at is taxes.

Alina Osokhovska: Taxes and also their investments, right?

Derek Gregoire: Exactly. Yeah. Investments, as we talked about, volatility, and then taxes. So, let’s look at some of the ways. So, we had, again, just looking at a recent client that came on. It was either from radio or TV. I forget which one, but they had worked hard, saved up over $5 million and they basically wanted to be more tax-efficient. So, if we can just take, and someone listening, if you’re a high net worth investor of over call it $1 million to $2 million of investible assets, what are some of the things they should be thinking about in their plans?

Alina Osokhovska: So, first of all, I would recommend to take a look at some fixed income in retirement because some people can have pensions. To your point, some people qualify for Social Security depending on when they want to retire. Some people retire at 65 or 67. Also, a good consideration will be health insurance in retirement because if you want to retire early and you have means, that’s amazing. But also, you need to think about how you’re going to pay for your health insurance before Medicare kicks in. So, that also is a good tax planning technique as well as pulling from different buckets. And at age 63, that’s when the taxable income considered for Medicare premiums because every year it is evaluated for the next two years.

Derek Gregoire: Yeah. So, your income this year determines your Medicare Part B premiums two years from now.

Alina Osokhovska: Yes, correct. So, for example, for the client that we are discussing, we took a look at their fixed income kind of like, “Oh, they have a pension.” Let’s take a look at their Social Security. Does it make sense for one of the spouses to maybe claim benefits right now and then transition to the spousal benefit at a later age? And for the spouse with a higher Social Security benefit, maybe it makes sense to delay and take advantage of that growth that Social Security offers. Also, we look at let’s say taxable accounts and when we make withdrawals from those accounts, the tax implications are different, right? Because then they’re going to realize either long-term or short-term gain and dividends qualified or non-qualified dividends. And if they take money from retirement sources like pre-tax IRA, it will be taxed at their ordinary tax rates.

Derek Gregoire: Yeah. Let’s think, guys, I just want to pause there. Think about that. So, most of the folks that, including this client, and I won’t get into the details, but the majority of folks listening have the majority of their assets in pretax, 403(b), 401(k), IRA, right? They think, “Oh, I have plenty saved. I have $1 million, $2 million,” but a lot of people never know the tax ramifications. Like, if you ask someone how much they have in their IRA, they can probably tell you just off the top of their head. If you ask someone, “What are the taxes you’ll pay on that in your lifetime?” very few can give you that answer.

And so, that’s what Alina has been saying is like the different amount of taxes that we left to look at. Like, if it’s a brokerage after-tax account, you’ll get long-term capital gains, short-term capital gains, dividends, are they qualified or non-qualified, interest, right? If it’s a pre-tax account, we’re looking at ordinary income. So, not only is that taxed at your highest bracket, also that adds to your future income when it comes to how much your Medicare Part B costs. And the list goes on and on. So, planning is a lot more than just like, yeah, it’s a couple of things. It’s like if you don’t do one thing right, it could impact three other areas of your plan.

Alina Osokhovska: Absolutely. Also, Social Security benefits, right?

Derek Gregoire: Yeah.

Alina Osokhovska: Because higher is your taxable income, then at a high rate, your Social Security benefits can be taxed at the highest 85% of the benefits can be taxed, right?

Derek Gregoire: Yep.

Alina Osokhovska: So, sometimes it makes sense for some people to take money from their pre-tax accounts at smaller portions just to spread out that tax liability over some years and then combine it with taking money from their taxable accounts, like brokerage accounts or cash accounts, Social Security benefits, or pension.

Derek Gregoire: Yeah. And also too, sometimes a lot of our clients, they might take a certain amount out of their pre-tax accounts to get to a certain bracket but then maybe they take the rest from after-tax or Roth so it doesn’t push them into a higher tax bracket or higher Medicare premiums. So, I’ll pause for a second there. If you are listening and you’re saying, “Oh, my gosh, I’ve never even heard of these things or I haven’t done these things and I’ve worked hard, saved up a lot of money,” you don’t want to be that person who’s worked up, saved up money, has enough to retire, and either, A, takes on too much risk or, B, has no tax efficiency because tax codes changing is almost as risky if not more than the market changing.

If tax codes go up, that means if tax rates go up, that means you have less when you pull out, which is like losing money in the market every year. So, at SHP, obviously, we can’t work with everyone, but few saved 1 million or more in your investible assets. We have said a few times as I, in one of our offices, you can come in for a second opinion. There’s no cost to do so. All you have to do is call 508-746-2400, again, 508-746-2400 or you can book a visit right online at SHPFinancial.com. Again, SHPFinancial.com. Like I said, people have worked too hard and too long to be not dotting all their Is and crossing all their Ts.

So, highly recommend if you’re in that boat, you saved up more than a million dollars, give us a call. We’re happy to walk you through that initial consultation. Alright. Back to the planning board. So, in that scenario, for them, we looked at another window of Roth conversions.

Alina Osokhovska: Yes.

Derek Gregoire: Maybe explain the Roth conversion process and how it works.

Alina Osokhovska: Absolutely. So, there are two different ways you can contribute to a retirement account: on a pre-tax basis then you take a deduction of the year of the contribution or after-tax basis. So, you don’t get the deduction and you put money, let’s say, in a Roth account, Roth IRA, Roth 401(k), Roth 403(b). And that money grows tax-free until you can take money out at your retirement age. So, when you have in your, let’s say, higher income years, you can take advantage of pretax contributions because then you get a deduction. You pay less taxes. But then you have to think about future tax ramifications of your distributions.

There is a great tool called Roth conversion that you can utilize to convert those pretax assets into Roth accounts. So, you pay tax at the time of the conversion, but then the assets in that Roth account grows tax-free.

Derek Gregoire: Perfect. Yeah. And that’s something that you definitely do not want to do without doing like… So, when our clients do this, we, A, look at their tax returns and, B, analyze their tax brackets and then make recommendations year by year to make sure we’re getting the most, being as efficient as possible with taxes within your plan because tax diversification is huge. And everyone thinks about diversification in the market, but having diversification between pretax, after-tax, and no tax, which is tax-free, the Roth is important and the problem is if all your money is in pre-tax 401(k) and you haven’t done any planning, we have to pull out of those buckets when you retire and it just depends on where the tax rates are.

And we have no say. There’s no flexibility because everything’s in that bucket. So, a lot of times in these windows of doing conversions, a lot of times you can add tens if not hundreds of thousands of dollars to their plan by proactive tax planning.

Alina Osokhovska: Absolutely. And when we move assets from a pre-tax account to a Roth account, we can be a little bit more aggressive in that account because we will not have to pay taxes on the growth. And I think that’s amazing.

Derek Gregoire: Yeah. So, that growth of your Roth is tax-free both now. So, let’s say you had to pull $50,000 out of your IRA, well, you might have to take out 80 just to keep 50 because state and federal taxes are held. If you need 50 out of a Roth, you just pull 50 because there are no taxes that have to be paid. And then secondly, if you look at the opportunity that we’re in right now in terms of proactive planning, again, we don’t know when this is going to air, but right now the market has some serious volatility. And the joke always, you know, when someone signs on as a client, they said, “Do we still pay you when the market goes down?”

I said, “You probably should be paying more,” because, number one, that’s when we do our best work because the planning tools that are available during market downturns, I won’t get them to all of them right now, well, I mean, I can tease a couple, like tax loss harvesting, shifting some money from conservative to more aggressive over dollar cost averaging back into more aggressive, but then also Roth conversions. Think about it. If you can convert, we did a ton of this back in 2020. During COVID, we did a ton of Roth conversions, which means we moved money from pre-tax to tax-free, right? We paid the taxes. But guess what? When the market recovers, you’re getting that recovery in a tax-free account that’s never taxed again.

So, think of the long-term impacts of those simple moves around Roth conversions. So, in a lot of the tools that we use when it shows the positive gain for our clients over the long run by doing some tax work doesn’t even consider the fact if we do it around market events like this. You know what I mean? So, Roth conversions, obviously, we have to find the right window to do it, the right tax brackets to do it. It’s not for everyone, but Roth conversions are a huge, huge, huge benefit to the type of planning that you should be looking at if you don’t have it in your plan.

So, again, I mentioned this a little bit earlier. We have offices right in Plymouth, Hyannis, and Woburn. If you’re listening and you say, “You know what, I’m concerned about the market, I’m concerned about these taxes. I never looked at things like this,” we’re happy to do a no-cost review with one of our advisors here. Simple. It’s very simple. Call our office, 508-746-2400. Again, 508-746-2400 or simply go to our website. There’s a ton of good information and content there, and you can also book a visit there at SHPFinancial.com. That’s SHPFinancial.com.

All right. So, Alina, we’re not going to get to all this by the way, but we talked about so far just setting yourself up cashflow-wise. Where does the money come from? Basically, the question clients want to know when it comes to cashflow is, “Are we going to be okay? Do we have enough? Are we going to be okay?” We’ve settled that here today. Obviously, you want to build that plan first. Now, we’re looking at threats to that cash flow and one of the huge threats is taxes. And we’ve looked at a couple of different ways to maybe plan for taxes in the future. Another concern of a lot of high net-worth clients and investors is around estate planning.

And so, before I get to that point, the other benefit too of having a Roth that I didn’t mention, not that everyone’s concern is leaving money behind, it should be more about you than anyone else. But assuming you have enough and you get by, let’s say you and your spouse want to leave some money to your children, if you leave it in a pre-tax IRA, they have 10 years where it all has to come out and it’s all taxed at the ordinary income. And it’s crazy how the government set that up, right? You figure because they know when the baby boomers pass away in their eighties and nineties, their children are going to be in their fifties and high-income bracket earners. And they don’t want to wait 10 years to pull it out because you’re going to get nailed all at once.

And if you take it out even a little bit at a time, that’s fully taxable to them. By converting to a Roth or having Roth IRA assets, let’s say you pass away at 95 years old, right, playing golf, whatever it is, now, your heirs, your children can wait 10 more years of tax-free growth before they have to cash out tax-free. So, think of the long-term planning opportunities around that are huge if it works in your situation. So, separate from that, there’s a lot of other estate planning techniques that we use, some around gifting, some around just estate planning in general. So, if you want to kind of tease a few of those areas, what are some things around gifting and estate planning we do for our clients, high net worth clients?

Alina Osokhovska: Yeah. So, first of all, I always ask our clients or prospects, whether they have any estate plan in place, right, whether they have any estate planning documents. And that is very important because we don’t want to think about something bad happening to us, but it’s life and it’s better to be prepared and take care of your family, of your kids, and also your assets to make sure that the wealth that you worked so hard for is transferred to the people you choose tax efficiently, right? So, just taking a look at the estate planning documents, there are some basic estate planning documents for people to have. I’m just going to mention them quickly.

It’s a durable power of attorney, healthcare proxy, HIPAA authorization, a living will, and there are more complex documents like various trusts. I’m not going to get into every single one of them, but if you don’t have any documents, this is a great starting point just to get some of them done. Then here at SHP, we take a look at the existing documents as well, just to make sure that everything is up to date. For example, durable power of attorney has to be renewed every three to five years, just not to be considered stale when you go to a financial institution. Let’s say a bank, they have their own regulations. They can say, “Oh, it’s too old. We are not going to accept it.” That’s not what you want to have. In regards to tax-efficient transfers, gifts, you can max out your annual gift tax exemption. As of right now, it is $18,000.

Derek Gregoire: Maybe 19.

Alina Osokhovska: 19, I think.

Derek Gregoire: It’s somewhere between 18 and 20, but that’s, yeah, you can say…

Alina Osokhovska: 19. You’re right. It is 19 for 2025.

Derek Gregoire: See, once in a while I get it right.

Alina Osokhovska: So, if you can utilize that to transfer funds to tax-free, basically, you don’t have to file a tax return to do that. If you are charitably inclined, you can also do QCDs, qualified charitable distributions, from your retirement accounts when you turn 70.5. You can also consider donor-advised funds so you can fund it with highly appreciated security. And then you can donate from that fund every year.

Derek Gregoire: Yeah. That’s a lot. Okay.

Alina Osokhovska: And I’m sorry, and you take a deduction for that gift.

Derek Gregoire: Yeah. So, you just gave a lot of awesome information. So, I just want to break it down a little bit in terms of like, first, why do clients sometimes gift? You can give 19,000 per person, per whoever. So, if you’re married, you can give 38,000 per year to whoever. And what that does is it reduces your overall estate because, Massachusetts, once you have over $2 million, it’s taxable. Your estate is taxable, an extra convenient tax that you get when you have over $2 million. If you’re married, you can do some trust planning and potentially get that to $4 million. But again, that’s why certain folks gift around different strategies around donations, right?

So, we always say to our clients, “If you’re already donating money,” right? A lot of our clients are charitably inclined and they’re giving a lot of money away. Sometimes they were giving from money they’d already paid taxes on, right? So, you get money in your bank account. That money you’ve already paid taxes on, and then you give $10,000, $20,000, or whatever to a charity, that’s awesome that charity gets that. But if you use a QCD at 70 or older, you’re taking that, you’re doing the same thing, but you’re giving it from pre-tax money. So, the charity is still giving the same amount but you’re giving them money out of your bad bucket, if you will.

That’s the pre-tax bucket. That’s the worst bucket you can own because every dollar that comes out is taxable, so why not give them that money? You don’t pay taxes on it and they get the same amount. Or like we do here at, we call the DAF, donor-advised funds known as a DAF. Let’s say you bought a stock for $10,000. It’s worth $100,000. You can bundle. You can give like $50,000, get a full deduction of appreciated stock into this donor-advised fund, and then you can donate that over future years, but get that main deduction maybe in a high tax bracket year or so forth. So, there are so many things that you can do around planning.

And I think the thing that Alina and I and our team always look at, when you look at a client’s plan when they first come in, let’s say a prospect that we just mentioned, they first came in, they had $5 million, $6 million. They wanted basically a full plan. They had an advice that was giving them good portfolio recommendations, but nothing else. And it’s like, “Oh my gosh, you’re missing the boat.” And I always learn my whole life it’s if you do a lot of little things right, it adds up to major success. And so, when it’s the same thing with our world of planning, if you think of all the things we just talked about, imagine what that does to the success rate and value of your financial plan and being a good steward of your financial plan.

When you’re maximizing when to take Social Security, what buckets you pull from and why, when to do Roth conversions, or when they make sense and when they don’t make sense? Does it make sense to do some donor-advised funds, some QCDs, tax loss harvesting? Now, especially like I mentioned, when the market’s down, there’s a lot of accelerated planning you can do around tax loss harvesting, Roth conversions, dollar cost averaging. There are so many things you can do to make lemonade out of lemons. Is that what they say? Take a bad situation and make it good because we did this in 2020 and when everything rebounded after, the results were amazing.

So, I think if you’re listening, we’ve mentioned it a couple of times, but the bottom line is as you’re listening to this, if you’ve saved more than a million dollars for retirement, do you feel like you have just a portfolio or do you have a full plan? And hopefully, during this show, in this episode, you’ve gotten an idea of the difference between the two. Because a portfolio is just stocks, bonds, mutual funds, annuities. A plan is putting purpose around each account, each situation, how does it project over the long run? When I make decisions, can I buy another house? Can we travel this much per year? How do you know unless you have a plan that shows all this?

And that’s what we provide for our clients here at SHP Financial. And we open the doors here back in 2003. And we have a team of over 50 here. And sometimes people say, “That’s a big team.” Well, it’s because we want to have, like Alina and the planning team are doing all the planning. We have a portfolio team running the portfolios and making sure those are done right. We have 10 different teams we won’t get into but there’s so much work that’s being done behind the scenes that in the end result is for you, our client. So, I would say if you haven’t taken advantage, if you’re not a client at this time, we don’t take on everyone, but we do have the ability to meet.

If you save up more than a million dollars and you want a second opinion on your situation, we’d be happy to sit down with you either at Plymouth, Woburn, Hyannis, or we have some satellite offices in Braintree, in Woburn. But the number to call, very simple, our office is 508-746-2400. Again, that’s 508-746-2400. And you can also visit us online and get a ton of information and book there as well. It’s SHPFinancial.com. Again, that’s SHPFinancial.com. Alina, thank you so much.

Alina Osokhovska: Thank you.

Derek Gregoire: Thank you for listening. We’ll talk to you again next week right here on the Retirement Roadmap Radio Show brought to you as always by SHP Financial.

[END]