Taxes and financial planning: Social security “tax torpedo”; Tax-efficient accumulation and decumulation; Tax-efficient charitable contributions; Health Savings Accounts; Rank-order to invest and pay down debts; Roth versus Traditional 401(k)s and IRAs; 529 accounts; Asset location; and Phaseouts of individual tax laws
Academic Degrees
PhD, Business, University of North Carolina-Chapel Hill
MBA, University of Pittsburgh
BBA, University of Notre Dame
Professional Experience
5 years as a CPA with public accounting firms specializing in taxation
Awards, Honors & Certificates
Montgomery-Warschauer Award: Honors the article published in the Journal of Financial Planning in the prior year that provided the most outstanding contribution to the betterment of the profession, 2017 and 2022
Chancellor’s Award for Excellence in Teaching (awarded to one Univ. of MO-St. Louis (UMSL) professor per year), 2017
Governor’s Excellence in Teaching Award (awarded to one UMSL professor per year), 2006
Selected Publications
Geisler, G., Harden, B., and Hulse, D. (2021). A Comparison of the Tax Efficiency of Decumulation Strategies. Journal of Financial Planning, 34(3), 72-89. (Received the 2022 "Montgomery-Warschauer Award" for most outstanding article contributing to the betterment of the financial planning profession.)
Abstract
This article examines several decumulation strategies for a client approaching retirement with a mix of tax-favored retirement accounts and taxable accounts, each holding appreciated stocks and taxable bonds. The analysis applies these strategies to three “nest egg” scenarios to determine their resulting portfolio lives while examining tax consequences throughout those lives. In these scenarios, the more tax-efficient decumulation strategies last from one percent to over eleven percent longer than both the Conventional Wisdom and Schwab’s recently marketed decumulation strategies. The results provide insights that financial planning professionals can use to tailor tax-efficient decumulation recommendations that better fit a client’s particular situation, increasing how long their wealth lasts during retirement.
Geisler, G., (2021). On the Way to Financial Freedom when Beginning a Career. Journal of Financial Service Professionals, 75(2), 58-69.
Abstract
This article provides a rank ordering of the most tax-efficient financial moves an employee should make when beginning a career. Ideally, the first two moves should be made together: put the maximum into a health savings account if the employee has high-deductible health insurance and put enough into a 401(k) account to obtain the maximum employer match. The next step is to pay down and ultimately pay off all high-interest-rate debts. The fourth step is to contribute to a Roth IRA annually since the contributions can be used for emergency spending needs tax-free.
Geisler, G. (2021). How to Avoid Paying Higher Medicare Premiums the First Two Years after Retiring. Journal of Financial Planning, September, 66-77.
Abstract
1) Holding after-tax cash flow constant, income for tax purposes and tax are both always significantly lower during retirement than during employment. 2) The amount of additional (i.e., higher than the base amounts of) Medicare premiums generally depend on income from the tax return two years prior. Many financial planning clients pay additional Medicare premiums in their first two years of retirement because their income in the two years before retirement is high from working full-time. 3) Form SSA-44 can be filed with the Social Security Administration, which requests that a more recent year’s income (e.g., first year of retirement) be used to determine additional Medicare premiums. After such form is filed, total additional Medicare premiums avoided for the first two years of retirement can range from approximately $1,700, to $9,500 for an unmarried retiree, and for married retirees who are both on Medicare can range from approximately $3,400 to $19,000. 4) Even if a client wants to increase after-tax cash flow (i.e., spending) upon retirement, significant reductions in additional Medicare premiums can occur if the form is filed, especially if the client has some of their “nest egg” outside of tax-deferred retirement accounts.
Geisler, G., and Drnevich, D. (2019). Tax Planning around the Phase-Out of the Qualified Business Income Deduction for Professional Service Businesses. Journal of Financial Planning, 32(6), 50-56.
Abstract
1) Beginning in 2018, a new deduction under IRC §199A of up to 20 percent of qualified business income for individual owners of business entities taxed as S corporations, partnerships, and sole proprietorships came into law. This new deduction is meant to “compensate” business owners for not operating as C corporations, which saw their federal income tax rate drop to 21 percent beginning in 2018.
2) This new deduction, however, is phased out for specified service trades or businesses (SSTBs), generally professional service businesses, based on the individual owner’s taxable income.
3) For example, in 2019 <2020>, the start of the phase-out range for a married couple filing a joint tax return is when their taxable income before the QBI deduction exceeds $321,400 <$326,600>, and this deduction is completely phased out when taxable income reaches $421,400 <$426,600>.
4) This paper discusses the importance of tax planning for those who may be affected by this phase-out because of the high effective federal marginal tax rates impacting an individual owner of an SSTB.
Geisler, G., and Harden, W. (2019). Should Charitable Taxpayers Donate Directly from an IRA or Donate Appreciated Securities? Journal of Financial Planning, 32(12), 46-56.
Abstract
This paper analyzes and compares alternatives for a qualifying taxpayer making charitable contributions either through qualified charitable distributions (QCD) from an IRA or by Donating Appreciated Securities (DAS). Making a QCD from an IRA was generally found to be the tax-preferred method of contributing; however, DAS may result in more tax savings in some cases. Specifically, for taxpayers who do not itemize deductions, QCD saves more tax than DAS. For taxpayers who do itemize deductions, a QCD can save more tax than DAS if taxpayer’s long-term capital gain (LTCG) tax rate is 0%. For taxpayers who do itemize, DAS generally saves more income tax than making QCDs if the taxpayer’s LTCG tax rate is 15% or higher and the maximum social security benefits (SSBs) are included in income.
Geisler, G., and Hulse, D. (2018). The Effect of Social Security Benefits and Required Minimum Distributions on Tax-Efficient Withdrawal Strategies. Journal of Financial Planning, 31(2), 36-47.
Abstract
Financial planners often determine and recommend tax-efficient withdrawal strategies for their clients. This article highlights how a portfolio’s life can be extended by managing withdrawals from taxable, tax-deferred, and tax-exempt accounts for a wide variety of clients.Cook, Meyer, and Reichenstein (2015) show that decumulating taxable investments coupled with conversions to Roth IRAs in the early years of retirement to fully use the 15 percent [current law, 12 percent] tax rate bracket, followed by decumulating tax-deferred accounts (e.g., traditional IRAs and 401(k)s) in the later years of retirement to fully use the 15 percent [current law, 12 percent] tax rate bracket coupled with withdrawals from Roth retirement accounts, can improve tax efficiency.Their analysis is extended here to consider Social Security benefits and required minimum distributions. It compares their recommended strategy to both a strategy that equates taxable income every year and a strategy some call the conventional wisdom (i.e., the taxable (nonqualified) account is decumulated first, then the tax-deferred (401(k)s and IRAs) is decumulated, and the tax-exempt (i.e., Roths) is decumulated last. This comparison is made for a variety of circumstances, including various account balances when retirement begins and starting Social Security benefits at age 66 versus age 70.The results indicate that the first two strategies outperform the conventional wisdom for these variety of circumstances.
Geisler, G. (2017). Taxable Social Security Benefits and High Marginal Tax Rates. Journal of Financial Service Professionals, 71(5), 56-67.
Abstract
When social security benefits (SSBs) are collected, the usual federal tax rates of 0%, 10%, 15%, 25%, 28%, 33%, 35%, and 39.6% change to effective marginal tax rates (MTRs) of 0%, 15%, 22.5%, 27.75%, 46.25%, 25%, 28%, 33%, 35%, and 39.6%. The four higher effective MTRs (15%, 22.5%, 27.75%, and 46.25%) are due to SSBs phasing in as taxable until reaching the maximum taxable percentage, 85%. Further, if the taxpayer’s income contains any qualified dividends or long-term capital gains, an effective MTR of 55.5% is sandwiched between the 27.75% and 46.25% MTRs. This article identifies when a client has a higher effective MTR and discusses tax planning strategies.
[Under current law, when social security benefits (SSBs) are collected, the usual federal tax rates of 0%, 10%, 12%, 22%, 24%, 32%, 35%, and 37% change to effective marginal tax rates (MTRs) of 0%, 15%, 18%, 22.2%, 40.7%, 22%, 24%, 32%, 35%, and 37%. The four higher effective MTRs (15%, 18%, 22.2%, and 40.7%) are due to SSBs phasing in as taxable until reaching the maximum taxable percentage, 85%. Further, if the taxpayer’s income contains any qualified dividends or long-term capital gains, an effective MTR of 49.95% is sandwiched between the 22.2% and 40.7% MTRs.]
Geisler, G. (2017). Investing in Stocks inside Retirement Accounts and Bonds in Taxable Accounts. Journal of Financial Service Professionals, 71(5), 77-89.
Abstract
It is widely held that investing in bonds inside retirement accounts and stocks inside taxable accounts is tax efficient. This view leads to the rule of thumb that ordinary-income-producing investments should be held inside retirement accounts. This rule does not stand up to scrutiny. This article shows that, if the economic environment is one of low expected inflation, low expected bond returns, and expected stock returns about double (or more) bond returns, investing in stocks with contributions to retirement accounts and buying investment-grade bonds in taxable accounts are wealth maximizing.
Geisler, G., and Hulse, D. (2016). The Taxation of Social Security Benefits and Planning Implications. Journal of Financial Planning, 29(5), 52–63.
Abstract
Up to 85 percent of Social Security benefits could be taxable, with the percentage increasing as income increases. Additional income can cause additional Social Security benefits to be taxable, a so-called “tax torpedo.” The tax effect of this tax torpedo depends on the tax bracket in which the benefits are taxed. This effect can be as high as 21.25 percent of the additional income, but it is less than 10 percent in many circumstances. This tax effect is an important factor to consider when deciding whether to start Social Security benefits at age 62 or age 70.
Geisler, G. (2016). Could a Health Savings Account Be Better than an Employer-Matched 401(k)? Journal of Financial Planning, 29(1), 40–48. (Received the 2017 "Montgomery-Warschauer Award" for most outstanding article contributing to the betterment of the financial planning profession.)
Abstract
The tax savings on many employees’ contributions to a health savings account (HSA) increases wealth by more than an employer match on the same employees’ 401(k) contributions. In such cases, surprisingly, the maximum allowable HSA contribution should be made prior to the employees’ contributing any amount to their 401(k). The higher an employee’s combined tax rate (i.e., federal income, state income, social security, and Medicare), the larger the employer’s 401(k) match must be to beat contributing to an HSA first. Specifically, an employee with a combined tax rate above 33.3% maximizes wealth by contributing to an HSA before contributing to a 401(k) with a 50% employer match. The following is a rank ordering of wealth-maximizing actions for investing and paying down debts: first, contribute the maximum to an HSA and contribute enough to a 401(k) to get the maximum employer match; if money is still available, next, pay down high-interest-rate debts; if money is still available, next, contribute to a 529 account if it produces state income tax savings and if funding future higher education costs of a loved one is important; and, if money is still available, next, contribute the maximum allowed for the year to unmatched retirement accounts.
Geisler, G. and Bischoff, R. (2016). 529 Plan Distributions and Federal Tax Credits. Journal of Financial Service Professionals, 69(6), 64-69.
Abstract
A common misperception among some financial service professionals is that an individual with a 529 plan who is paying for higher education costs should pay the first $4,000 of tuition and fees per year either out of a checking or savings account or out of a loan in order to take full advantage of the federal income tax credit or deduction and then pay the remainder out of the 529 plan. This article explains that the full amount of higher education costs can be paid out of a 529 plan and the maximum federal tax credit or deduction will still be received.
Geisler, G., and Moehrle, S. (2015). Understand the Key Differences in MO, IL, and KS When Advising Clients on 529 Plans. The Asset, January, 24-25.
Geisler, G., and Stern, J. J. (2014). Retirement Account Options When Beginning a Career. Journal of Financial Service Professionals, 68(3), 45-50.
Abstract
When college graduates begin their careers, they face a number of financial choices and obligations. Their choices typically include one or more retirement account options. The options generally include IRAs (Roth and/or traditional), 401(k) plans (Roth and/or traditional) and, possibly, 401(k) contributions matched by the employer. In this article, a decision-making hierarchy is provided. The hierarchy ranks all of the retirement account alternatives in order to facilitate choices that are tax efficient and maximize wealth. A simplified version of the ranking is as follows: (1) Roth 401(k) with matching employer contributions; (2) traditional 401(k) with matching employer contributions; (3) Roth IRA; (4) Roth 401(k) (unmatched); and (5) traditional 401(k) (unmatched).
Geisler, G., and Hulse, D. (2014). Traditional versus Roth 401(k) Contributions: The Effect of Employer Matches. Journal of Financial Planning, 27(10), 54–60.
Abstract
Many employers offer 401(k) plans that allow both traditional and Roth 401(k) contributions and typically match some or all of their employees' contributions. An employee who cannot afford to contribute enough to maximize the employer's match can obtain a larger matching contribution by contributing to a traditional 401(k) because before-tax dollars contributed to it cost less than after-tax dollars contributed to a Roth 401(k). Interestingly, this advantage can make a traditional 401(k) more attractive than a Roth 401(k) in many circumstances where an employee's current tax rate is lower than his or her tax rate will be in retirement. This result is contrary to the usual advice of choosing the Roth-type account when the tax rate is expected to be higher at retirement. The reason is that, while the higher future tax rate disfavors the traditional 401(k), the larger employer match the employee obtains favors the traditional 401(k). Whether these two factors are a net advantage or disadvantage depends on the magnitudes of the current and future tax rates, as well as the employer's matching rate.
Geisler, G. (2013). Federal Income Tax Laws That Cause Individuals’ Marginal and Statutory Tax Rates to Differ. Journal of Accounting Education, 31(4), 430-460.
Abstract
This article presents a "phaseouts table" that compiles and summarizes the phaseouts of and limitations on deductions, credits, exclusions from income, and allowed contributions for individual U.S. federal income taxpayers in 2013. Phaseouts can cause individual taxpayers' marginal tax rate (MTR) to be higher than their statutory tax rate (STR) (i.e., "bracket" based on taxable income). For each phaseout, the table includes how the phaseout works, the adjusted gross income (AGI) range for the phaseout, and the related formula to compute MTR, given STR.
[Note: “Phaseouts tables” that cause individuals' marginal and statutory tax rates to differ. Email geisler@iu.edu to receive such tables free from 2014 – present year.]
Geisler, G., and Moehrle, S. (2013). The Effect of State Taxes on Baseball Free Agents. State Tax Notes, March, 869-878.
Abstract
In 2012, Albert Pujols's total income taxes as a percentage of salary was 40% with the Los Angeles Angels of Anaheim. If he had remained with his previous team, the St. Louis Cardinals, the percentage would have been only 36%. Mark Buehrle's total income taxes as a percentage of salary dropped to only 33% with the Miami Marlins. If he had remained with his previous team, the Chicago White Sox, the percentage would have been 37%.
Geisler, G., and Moehrle, S. (2011). Missouri Tax Savings Are the MOST. The Asset, November, 18-20.
Abstract
The tax advantages of a 529 account are better than a Roth retirement account: Earnings on the investments are exempt from all income taxes (same as a Roth); withdrawals are tax-free (same as a Roth) if used for the beneficiary's expenses at any higher education institution in the U.S. where students are eligible to receive federal financial aid; there is no income limitation (unlike a Roth IRA) on who can contribute to a Missouri 529 account; a larger annual amount can be contributed than to a Roth IRA; and it generates Missouri income tax savings (Roth contributions do not save state income tax).
Geisler, G., and Farmer, T. (2007). Taking Stock of Employee Stock Purchase Plans. Journal of Accountancy, May, 44-48.
Geisler, G. (2007). Comments on Stock Option Exercise Date Manipulation. Tax Notes, January, 215-216.
Geisler, G. (2006). Best Use of Spare Cash. Journal of Accountancy, September, 41-43.
Geisler, G., and Heinz Kerry, T. (2005). An AMT Trap That Caught Teresa Heinz Kerry in 2003. Tax Notes, July, 317-318.
Geisler, G., and Wallace, S. (2005). The Use of Compensation for Tax Avoidance by Owners of Privately-Held Corporations. Journal of American Taxation Association, 27(1), 73–90.
Geisler, G., and Wingbermuehle, K. (2003). Retirement Savings Credit: Investing $1,500 at a Cost of $284. Tax Notes, July, 69-71.
Geisler, G., and Larkins, E. (2003). Current Year Tax Laws that Cause Low Visibility of an Individual’s Effective Marginal Tax Rate. Tax Notes, November, 627-634.
Geisler, G., and Larkins, E. (2002). Marginal Tax Rates on Foreign Profits of U.S. Multinationals. Advances in Taxation, 14, 85–116.
Geisler, G., (2000). Equity Security Investments: Evidence on Tax-Induced Dividend Clienteles. Journal of American Taxation Association, 22(1), 1–17.
Geisler, G., Calegari, M., and Larkins, E. (1999). Implementing Teaching Portfolios and Peer Reviews of Tax Courses. Journal of American Taxation Association (Educator’s Forum), 21(2), 95–107.
Geisler, G., Collins, J., and Shackelford, D. (1997). The Effects of Taxes, Regulation, Earnings, and Organizational Form on Life Insurers’ Investment Portfolio Realizations. Journal of Accounting and Economics,24(3), 337–361.
Edited on August 2, 2022
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