Roth IRA Conversions as a Tax Strategy

Based in St. Louis Park, Minnesota, Travis Hansberger provides a host of client-driven solutions as head of Millstone Wealth Management. Working closely with individuals and families, Travis Hansberger has extensive knowledge of tax-free retirement income strategies such as the conversion of assets in a traditional IRA to a Roth IRA.

The benefit of the Roth IRA is that taxes are paid beforehand and thus qualified withdrawals are federal income-tax free. They may also qualify as tax-free at the state level, with the caveat that those who receive funds tax-free must be 59 and a half or older and fulfill a five-year holding requirement.

When converting a large IRA to a Roth account, one strategy is to accomplish this piece by piece, by “filling the tax bracket.” This ensures that your tax bracket does not get bumped up to a higher level during the process. At the same time, this can help you avoid paying taxes associated with a Roth conversion involving money held in retirement accounts.

One major reason why a Roth conversion is attractive now is that it comes before the potential expiration of lower federal tax rates at the end of 2025. Paying taxes at current rates is a hedge against a rise in taxes in the future, which may be considered necessary to cover extra stimulus and infrastructure spending

Minnesota’s Groves Academy Serves

Travis Hansberger, an airline pilot for seven years before the birth of his son, returned to school to earn his Certified Financial Planner (CFP) credentials and joined the financial services industry in 2007. He spent more than a decade honing his expertise before opening his own firm, Millstone Wealth Management, which he currently serves as president. Travis Hansberger still enjoys flying, as well as fishing and spending time with his family, and participates in community affairs as a member of the board of the Groves Academy.

Located in St. Louis Park, Minnesota, the Groves Academy serves a student body of about 275 young people in grades K-12 with learning disabilities and attention disorders. Founded in 1972 as the Groves Learning Center in Minnetonka, its inaugural enrollment was just 21 students, but it was unique in that it was the first school in Minnesota established to serve that community. Previously, those students whose families could afford it sent them to a boarding school in Florida.

As the school approaches its 50th anniversary it looks back on several milestones, not the least of which has been its growth to a student body of 275. In 1982, it moved to its current location in St. Louis Park, and in 1985 it was renamed Groves Academy. Over the years, it has enhanced its facilities significantly both through expansion and upgrades.

In 2015, the school opened The Learning Center to share its experience and expertise, offering psychoeducational evaluations for students at other schools having trouble learning and leading in the exploration of various interventional strategies to help students overcome those obstacles. The Learning Center also offers tutoring programs, speech-language therapy, and summer programs.

The Groves Academy has developed an approach to teaching literacy it calls the Groves Literacy Framework. This approach has been so successful that the school joins with other schools in Groves Literacy Partnerships to teach their educators the approach.

Further information about the Groves Academy is available online at grovesacademy.org.

Groves Academy Offers Writing & Executive

As owner and president of Millstone Wealth Management, Travis Hansberger focuses on building tax-sensitive investment portfolios for clients. In addition to his professional responsibilities, Travis Hansberger is a board member of Groves Academy.

Located in St. Louis Park, Minnesota, Groves Academy is a nonprofit organization providing educational services to students struggling with learning disabilities. The academy offers a variety of summer programs catering to students from grades 2-11.

Designed for students with learning challenges such as ADHD and dyslexia, the Groves Summer Programs include two separate writing and executive function programs for middle schoolers and high school students entering grades 9-10.

The Writing and Executive Function program incorporates time management skills and cognitive flexibility strategies to boost students’ performance. Additionally, the academy implements the Writing Revolution curriculum to provide students with support for their writing.

The one-month summer program is scheduled to start on July 12, 2021. The academy will provide a safe environment for students to attend the program in person.

Accelerated Deductions in Tax Planning

With more than a decade of experience in the finance sector, Travis Hansberger has built expertise in the area of wealth management. The president of Millstone Wealth Management, Travis Hansberger offers a number of financial services to clients through his firm. One of these services is tax planning.

There are several techniques or strategies that are used in tax planning.

One of these is accelerated deductions. An accelerated deduction means making purchases at an earlier date than strictly required in order to avoid paying higher taxes.

Higher taxes are usually charged on income that go beyond a specified tax bracket. As an example, let’s assume that any income beyond $100,000 will be subject to higher taxes .

This means that a person or company making $150,000, will be paying higher taxes on the last $50,000 earned. Let’s further assume that the person or company is in the fourth quarter of the current fiscal year, with taxes due on April 15 of the next year.

There are two options: The first one is to do nothing and pay the tax in April. The second option is to find accelerated deductions and save on paying the taxes on the $50,000, which would be taxed at a higher rate than the first $100,000.

Accelerated deduction is done by making tax-deductible purchases before the end of the fiscal year. Typically, these would be useful supplies for the business. By making these purchases early, deductions can be made against income so that taxable income for the year will come in under the sum where the higher rate kicks in. The person or business will then have the dual benefit of making essential purchases while paying less taxes.