Dr. William Reichenstein, CFA, is Professor Emeritus of Investments at Baylor University. He is Head of Research at Social Security Solutions, Inc, a firm that developed software to help individuals decide when to begin Social Security benefits (www.ssanalyzer.com) and Income Solver, Inc., a firm that helps retirees tax-efficiently withdraw funds from their financial portfolio (www.incomesolver.com).
He has published more than 180 articles and several books, including In the Presence of Taxes: Applications of After-tax Asset Valuations, FPA Press (August 2008) and with William Meyer Social Security Strategies, 3rd Edition.
His recent work concentrates in two areas. First, when should individuals begin Social Security benefits? Second, how can we add value to client accounts using the tax code? His research advocates calculating an individual’s after-tax asset allocation that compares after-tax fund across savings vehicles (e.g., 401(k), Roth IRA, and taxable accounts). His research also has implications for the asset-location decision among other issues.
He is a member of Wall Street Journal’s “The Experts” panel.
Industry Expertise (4)
Areas of Expertise (6)
Tax-based Investment Strategies
Reader's Choice Award - Financial Analysts Journal Graham & Dodd Awards of Excellence (professional)
The Graham and Dodd Awards were created in 1960 to recognize excellence in research and financial writing and to honor Benjamin Graham and David L. Dodd for their enduring contributions to the field of investment analysis.
University of Notre Dame: Ph.D.
St. Edward's University: B.A.
Media Appearances (3)
Why it may pay off to double up tax deductions this year
The Wall Street Journal
Taxpayers worried about the potential loss of tax savings from itemized deductions from tax reform next year may want to consider doubling up this year.
In a double-up strategy, a taxpayer–single or married–would combine (that is, double up) itemized deductions in the same year and then take the standard deduction in the adjacent year. My wife and I have used this tax-saving strategy for more than a decade. And based on proposed tax reforms, some taxpayers could benefit from the strategy this year...
Why you should base asset allocations on aftertax dollars
The Wall Street Journal
There is wide agreement that the choice of asset allocation is an investor’s most important decision. But I offer a little disagreement on how to go about it: You should calculate your asset allocation using an aftertax framework, not the traditional approach.
Consider an investor, Ann, who has $200,000 in a taxable account (a.k.a., brokerage account), $200,000 in a Roth IRA, $600,000 in a tax-deferred account like a 401(k) or traditional IRA. The taxable account and Roth contain stocks, while the tax-deferred account contains bonds...
International investments: Bite the bullet?
In order to get a better grasp on the risk and reward of international investments in a wishy-washy market, we asked William Reichenstein, CFA, Ph.D., to provide us with his insight. Reichenstein holds the Pat and Thomas R. Powers Chair in Investment Management at Baylor University. He is the author of "In the Presence of Taxes: Applications of After-Tax Asset Valuations," and he co-authored "Integrated Investments & the Tax Code" with William Jennings ...
The authors considered an individual investor who holds a financial portfolio with funds in at least two of the following accounts: a taxable account, a tax-deferred account, and a tax-exempt account. They examined various strategies for withdrawing these funds in retirement. Conventional wisdom suggests that the investor should withdraw funds first from the taxable account, then from the tax-deferred account, and finally from the tax-exempt account. The authors provide the underlying intuition for more tax-efficient withdrawal strategies and demonstrate that these strategies can add more than three years to the portfolio’s longevity relative to the strategy suggested by the conventional wisdom.
Asset allocation is profoundly influenced by at least two underappreciated concepts. First, tax-deferred accounts—for example, 401(k)s—are like partnerships in which the investor owns (1 – tn) of the partnership principal and the government owns the remainder, where tn is the marginal tax rate when the funds are withdrawn. Second, the government shares in both the return and the risk of assets held in taxable accounts. The authors discuss these concepts’ implications for wealth management.