Profit Preservation: Tax-Deferred Strategies for Selling Your Business

Admin • March 8, 2024

You’ve built a thriving business and poured your heart and soul into it, and now it’s time to sell and reap the rewards. Congratulations! That’s a monumental step, not just in terms of the immediate financial windfall but also for your long-term financial health. It’s an exhilarating, albeit slightly nerve-wracking, phase. 

But before you pop the champagne and sail off into the sunset, let’s talk strategy, specifically tax strategy. Yes, I know “tax” isn’t the most thrilling word in our vocabulary, but stick with me because Uncle Sam has his eye on a piece of the pie. 

Selling a business can trigger a significant tax bill, leaving you feeling like you just worked hard for someone else. Understanding and leveraging tax-deferred opportunities can significantly impact how much of that sale you get to keep and grow over time. 

What Does Tax-Deferred Mean?

Tax-deferred means you can delay paying taxes on investments and their earnings until you withdraw the money. This allows your money to grow tax-free, potentially leading to significant savings. Often, when money is withdrawn during retirement, you will be in a lower tax bracket.

Here’s an example: Imagine you sell your business for $1 million, resulting in a $500,000 capital gain. If you were to pay taxes on that amount right away, it could leave a hefty dent in your pocket. But by utilizing a tax-deferred strategy, you can hold onto that money and invest it, allowing it to grow tax-free until you withdraw it later. The longer you leave it untouched, the more it can compound, leaving you with a much larger sum.

Tax Strategies for the Savvy Seller

There are several tax-deferred opportunities available that can help you minimize your tax burden. Let’s explore some options you might want to consider.

1. Seller Financing

Have you ever thought about being the bank? In seller financing, you extend credit to the buyer to purchase the business. The buyer pays you back over time with interest. The catch? You don’t get all your money upfront. Still, it can spread the tax burden over several years, potentially keeping you in a lower tax bracket and reducing the immediate tax hit.

Pros:

  • Spreading sale proceeds over several years minimizes annual capital gains taxes for tax benefits.
  • Seller financing can speed up the closing process since there’s no waiting on the bank’s loan approval.
  • Offering seller financing widens the potential buyer pool.
  • Sellers may command a higher sales price because they’re offering financing.
  • Seller financing generates consistent interest income for sellers.

Cons:

  • One of the most significant risks for sellers is the buyer defaulting on the loan. 
  • Deferred full payment to sellers.
  • Crafting a seller financing agreement requires legal assistance to ensure the contract protects both parties. This can add to the transaction’s costs and time.
  • Sellers manage loans and address payment issues.

2. Installment Sales

Similar to seller financing , installment sales allow you to defer taxes by receiving the proceeds over time. You only pay taxes on the portion of the gain you receive each year. This can be a great way to manage your tax liability and keep more money working for you over the sale period.

Pros:

  • Pay tax only on received installment profits, deferring tax liability.
  • Installment sales enhance buyer accessibility beyond traditional financing.
  • Earn interest on financed amounts for additional income.

Cons:

  • Risk of buyer loan default.
  • Delayed full payment of sale proceeds.
  • Potential for lower future income if interest rates rise.
  • Possible decline in property value over time, complicating resale after default.

3. Qualified Opportunity Funds (QOFs)

This program was established by the federal government in 2017 and designed to spur economic development in specific areas. If you reinvest your capital gains into a QOF operating in a designated Qualified Opportunity Zone (QOZ), you can defer paying taxes on those gains until you sell your investment, or until December 31, 2026 — whichever comes first. 

You must reinvest your capital gains within six months of selling your business. If you hold the investment for at least five years, you can exclude a portion of your original capital gains from taxation. If the investment is held for at least ten years, any capital gains from the future sale of the investment are returned to you tax-free.

Pros:

  • Defer taxes on QOF gains until Dec 31, 2026, or upon sale/exchange.
  • 10% gain exclusion for QOFs held over 5 years; 15% for over 7 years.
  • After 10 years, QOF investments can grow tax-free.
  • QOF investments boost distressed areas with new jobs and development.
  • Opportunity to make a positive impact in at-need communities.

Cons:

  • As with any investment, there’s no guarantee of a return, and investing in distressed areas may carry higher risks.
  • There are strict regulations to qualify for the tax benefits, including how and when funds are invested and managed.

4. Real Estate 1031 Exchange

If your business includes real estate, a 1031 exchange allows you to defer capital gains taxes by reinvesting the proceeds from the sale of your property into the purchase of another property. Also known as a “like-kind” exchange, the IRS lets you sell one property and reinvest the proceeds in another similar property while deferring taxes on your gain. 

With careful maneuvering, real estate investors can use 1031 exchanges to keep deferring taxes indefinitely through strategic property swapping.

Pros:

  • Defer capital gains taxes on the sale.
  • By deferring taxes, investors can potentially acquire larger or more valuable properties, allowing their portfolio to grow.
  • Properties exchanged through 1031 may be inherited with a stepped-up basis, negating capital gains tax.

Cons:

  • The rules governing 1031 exchanges are complex; failing to adhere to them can result in a significant tax liability.
  • Strict timing pressures quick decisions, risking less favorable choices.
  • Not all real estate transactions qualify for a 1031 exchange. 

5. Charitable Remainder Trust (CRT)

Feeling philanthropic? A CRT allows you to contribute a portion of your business sale proceeds to a trust, which then pays you (or another beneficiary) a stream of income for a term of years or for life. After the term ends, the remainder goes to your chosen charity. This strategy can offer immediate tax deductions and reduce estate taxes while supporting a cause close to your heart.

For example, let’s say you sold your business for $5 million and contributed $2 million in proceeds to a CRT. The CRT could then pay you a set percentage of $2 million yearly, say 5%, equaling $100,000 annually. After your death, the charity of your choice would receive the remaining assets in the CRT.

Pros:

  • Claim an immediate tax deduction in the year you set up the trust and transfer assets into it.
  • If the CRT is funded with appreciated assets, assets within the trust can be sold without incurring capital gains tax at the time of the sale. This allows the full value of the assets to be reinvested by the trust, potentially increasing the income generated for the beneficiaries.
  • CRTs provide an income stream for the beneficiaries. 
  • Beyond the financial benefits, you can support causes and organizations important to you.

Cons:

  • CRTs are irrevocable; beneficiaries or terms of the trust cannot be changed.
  • Setting up and managing a CRT can be complex, requiring legal and financial expertise.
  • Income received depends on the trust’s investment performance. Poor investment performance can reduce the income stream and the ultimate charitable donation.

Let Five Pine Wealth Help You With Tax-Deferral Strategies

Smart tax planning is crucial, and every situation is unique. It’s essential to carefully evaluate your options and seek professional advice before making any decisions.

Remember, navigating the complexities of tax law can be tricky. Five Pine Wealth Management has experienced advisors who can help you determine the best tax-deferral opportunities for your situation. To schedule a meeting, send an email or give us a call at 877.333.1015.

Selling your business is a considerable achievement and the start of a new chapter. Celebrate your success, explore your options, and make informed decisions to maximize the rewards of your entrepreneurial journey.

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401(k) Millionaire: Proven Strategies to Reach 7 Figures in Your Retirement Account

October 17, 2025
Key Takeaways Maxing out your employer match provides an immediate 50-100% return and is the easiest way to accelerate your 401(k) growth. Reaching $1 million in your 401(k) depends more on consistent contributions over time than on being the highest earner or picking winning investments. High earners can potentially contribute up to $70,000 annually through a mega backdoor Roth conversion if their employer plan allows after-tax contributions. Hitting seven figures in your 401(k) might sound like a pipe dream, but it's more achievable than you think. With the right 401(k) investment strategies and a disciplined approach, becoming a 401(k) millionaire is within reach for many mid-career professionals. Let's walk through exactly how you can get there. The Math Behind Becoming a 401(k) Millionaire Before we discuss strategies, let's look at the numbers. Understanding the math helps you see that reaching $1 million isn't about getting lucky — it's about time, consistency, and thoughtful planning. Starting Age Annual Contribution Balance at 65* 30 $15,000 $1.5 million 30 $20,000 $2 million 40 $25,000 $1.3 million *Assumes 7% average annual return Time matters, but it's never too late to build substantial wealth if you're willing to prioritize your retirement savings. 7 Steps to Build Your 401(k) to Seven Figures Now that you understand the math, let's break down the specific strategies that will get you there. Step 1: Max Out Your Employer Match (The Easiest Money You'll Ever Make) If your employer offers a 401(k) match, contributing enough to capture it fully is the absolute first step: it’s free money that provides an immediate 50-100% return on your investment. Let's say your employer matches 50% of your contributions up to 6% of your salary. If you earn $150,000 and contribute $9,000 (6% of your salary), your employer adds $4,500. That's a guaranteed 50% return before your money even hits the market. Not taking full advantage of an employer match is like turning down a raise. Make sure you're contributing at least enough to capture every dollar your employer offers. Step 2: Gradually Increase Your Contribution Rate Once you've secured your employer match, the next step is increasing your personal contribution rate over time. For 2025, the 401(k) contribution limit is $23,500 (or $31,000 if you're 50 or older with catch-up contributions). Here's a practical approach: Every time you get a raise or bonus, direct at least half toward your 401(k). If you get a 4% raise, bump your contribution by 2%. Many plans now offer automatic annual increases. If yours does, set it to increase your contribution by 1-2% annually until you hit the maximum. You'll barely notice the change, but your future self will thank you. Step 3: Master Tax-Advantaged Retirement Accounts Through Strategic Contributions Traditional 401(k) contributions reduce your taxable income now, which is ideal if you're in a high tax bracket today. Roth 401(k) contributions don't reduce current taxes, but withdrawals in retirement are tax-free — valuable if you're earlier in your career or expect a higher income later. A hybrid approach works for many of our clients. Step 4: Optimize Your 401(k) Investment Strategies Your contribution rate matters, but so does what you're investing in. We regularly see clients who contribute aggressively but choose overly conservative investments that don't provide enough growth. Keep costs low . Target-date funds and index funds typically offer the lowest expense ratios. Every 0.5% in fees you avoid can add tens of thousands to your retirement balance over 30 years. Rebalance annually . Market movements throw your allocation off balance. Set a reminder once a year to review and rebalance your portfolio back to your target allocation. Avoid the temptation to chase performance . Last year's top-performing fund is rarely this year's winner. Stick with broadly diversified, low-cost options. Step 5: Consider a Mega Backdoor Roth Conversion If you're a high earner who's already maxing out regular 401(k) contributions, a mega backdoor Roth conversion can accelerate your retirement savings. Here's how it works: Some employer plans allow after-tax contributions beyond the standard $23,500 limit. The total contribution limit for 2025 (including employer contributions and after-tax contributions) is $70,000 ($77,500 if you're 50+). If your plan permits, you can make after-tax contributions up to that limit, then immediately convert those contributions to a Roth 401(k) or roll them into a Roth IRA. This gives you tax-free growth on substantially more money than the regular contribution limits allow. Not all plans offer this option, and the rules can be complex. Check with your HR department to see if your plan allows after-tax contributions and in-plan Roth conversions or rollovers. Step 6: Avoid These Common 401(k) Mistakes Even with great 401(k) investment strategies, mistakes can derail your progress toward seven figures. Avoid: Taking loans from your 401(k) . While it might seem convenient, you're robbing yourself of compound growth. The money you borrow stops working for you, and you're paying yourself back with after-tax dollars. Cashing out when changing jobs . Rolling over your 401(k) to your new employer's plan or an IRA allows your money to continue growing tax-deferred. Cashing out triggers taxes and penalties that can set you back years. Panic selling during market downturns . Market volatility is normal. The clients who reach $1 million are those who stay invested through ups and downs, not those who try to time the market. Step 7: Stay Consistent (Even When It's Boring) The path to becoming a 401(k) millionaire isn't exciting (and that’s a good thing!). The most successful savers aren't those who constantly tweak their strategy or chase the latest investment trend. They're the ones who set up automatic contributions, review their allocation once a year, and otherwise leave their 401(k) alone. Let Five Pine Help You Build Your Million-Dollar Plan Reaching $1 million in your 401(k) is absolutely achievable with the right strategy and discipline. Whether you're just starting your career or playing catch-up in your 40s and 50s, the steps remain the same: maximize contributions, optimize your investments, take advantage of tax-advantaged retirement accounts, and stay consistent. At Five Pine Wealth Management , we help clients build comprehensive retirement strategies that go beyond just their 401(k). We can analyze your current contributions, recommend optimal allocation strategies, and help you coordinate your employer plan with other retirement accounts. Want to see what your path to seven figures looks like? We help clients build these roadmaps every day. Email us at info@fivepinewealth.com or give us a call at 877.333.1015. Let's talk about your specific situation. Frequently Asked Questions (FAQs) Q: Should I prioritize maxing out my 401(k) or paying off debt first? A: Start by contributing enough to capture your full employer match — that's an immediate 50-100% return you can't get anywhere else. Beyond that, prioritize high-interest debt (credit cards, personal loans) since those interest rates typically exceed investment returns. Q: Should I stop contributing during market downturns to avoid losses? A: No — continuing to contribute during downturns is actually one of the best strategies for building wealth. When prices are lower, your contributions buy more shares, setting you up for greater gains when the market recovers. Q: I'm 55 with only $300K saved. Is it too late to reach $1 million?  A : While reaching exactly $1 million by 65 might be challenging, you can still build substantial wealth. Maxing out contributions, including catch-up ($31,000/year), could get you to $750K-$850K depending on returns. Disclaimer: This is not tax or investment advice. Individuals should consult with a qualified professional for recommendations appropriate to their specific situation.

Couples Money Management: Why Both Spouses Need to Know Where the Money Is

October 17, 2025
Key Takeaways Both spouses should understand the family’s finances, even if only one manages them, to prevent confusion or stress during life’s unexpected events. Regular money check-ins, shared account access, and attending financial planning meetings together help couples build confidence and clarity. Partnering with a fiduciary advisor ensures both spouses have support, education, and guidance for comprehensive wealth management and long-term peace of mind. Money is one of the most common sources of stress in relationships. Some couples argue about spending habits, while others quietly hand off all financial responsibilities to one spouse and never revisit the arrangement. At first glance, this setup can feel efficient: one partner pays the bills, manages investments, and handles taxes while the other takes care of different responsibilities. However, there is a risk to this method. If something unexpected happens, the spouse who hasn’t been involved in financial decisions can feel completely lost. Even highly capable, intelligent people often tell us they don’t know where accounts are located, how much income is coming in, or what investments they own. When life throws a curveball, like illness, death, or divorce, that lack of knowledge creates unnecessary anxiety during an already difficult time. The solution is not to necessarily make both partners money managers, but to ensure both understand the big picture. Let’s walk through why this matters, what it looks like in practice, and how you can start today. Financial Planning for Couples Effective financial planning for couples goes beyond having the right investment mix or adequate insurance coverage. It requires both spouses to understand the big picture of their financial life, even if only one manages the day-to-day details. This doesn't mean both partners need to become financial experts. Instead, it means creating transparency and basic literacy that protects your family's financial security regardless of what life throws at you. Here are a few essentials: Regular check-ins : Schedule monthly or quarterly “money talks” where you review accounts, upcoming expenses, and investment performance. This keeps both partners informed. Shared access : Make sure both spouses have login information for bank, investment, and retirement accounts. A secure password manager can help keep things organized. Big-picture clarity : Even if one spouse handles the details, both should know where you stand with assets, liabilities, income, and goals. Think of it as insurance against uncertainty. If one spouse suddenly has to take the reins, they aren’t starting from zero. Couples Money Management Couples' money management doesn’t have to mean “50/50 responsibility for every financial task.” Instead, think about it as defining roles while keeping communication open. Many households operate on a “primary manager” system. One person writes the checks, monitors the accounts, and interacts with financial advisors. That’s perfectly fine, as long as the other spouse has visibility. Problems arise when the "non-manager" is completely shut out. Some practical ways to stay connected: Attend meetings together : Whether it’s with your accountant, attorney, or financial planner, both spouses should be present. Hearing the same information firsthand helps prevent misunderstandings. Document everything : Create a simple household financial binder (digital or physical) that includes account numbers, insurance policies, estate documents, and contact info for professionals you work with. Ask questions : No question is too small. If you don’t understand how an investment works or why you own it, speak up. Practice decision-making together: Involve both partners in financial decisions, even small ones. This builds confidence and familiarity with your financial priorities and decision-making process. Fiduciary Financial Planning: The Professional Partnership Advantage Working with a fiduciary financial advisor creates an additional layer of protection for couples navigating financial planning together. Fiduciary advisors are legally required to act in your best interest, providing objective guidance that supports both partners' financial security. A good fiduciary advisor will insist on meeting with both spouses regularly, ensuring that financial strategies are understood and agreed upon by both partners. They can also provide education and support to help less financially-inclined spouses build confidence and understanding over time. This professional relationship becomes especially valuable during transitions. When one spouse dies or becomes incapacitated, having an advisor who knows both partners and understands the family's complete financial picture provides stability during chaos. Comprehensive Wealth Management Comprehensive wealth management goes beyond investments. It covers cash flow, taxes, estate planning, insurance, and long-term care strategies. For couples, it also means creating contingency plans. What happens if one spouse passes away? Will the survivor know how to access accounts? What if the “financial spouse” faces cognitive decline later in life? Will the other partner have the confidence to step in? These are not fun scenarios to imagine, but planning for them is an act of love. Comprehensive wealth management ensures: Estate documents are in place and up to date (wills, powers of attorney, trusts). Beneficiaries are correct on retirement accounts, insurance, and other assets. Tax planning strategies are understood by both spouses, so surprises don’t derail long-term goals. Cash flow is sustainable even if income sources shift (such as after retirement or the loss of a business owner’s salary). When couples approach wealth management together, they reduce the risk of financial upheaval during life’s transitions. When Life Changes Everything: Rebuilding Financial Confidence After Loss Despite the best preparation, losing a spouse creates emotional and financial challenges that feel overwhelming. If you find yourself suddenly managing finances alone, remember that feeling lost is normal and temporary. Start by taking inventory of your immediate needs. Focus on essential expenses and cash flow first. Most other financial decisions can wait while you process your grief and adjust to your new reality. Don't make significant financial changes immediately. Grief affects judgment, and rushed decisions often create problems later. Give yourself time to understand your new situation before making significant moves. Lean on your professional team. This is exactly when having existing relationships with financial advisors, attorneys, and accountants becomes invaluable. They can provide stability and guidance during an unstable time. Consider working with a counselor who specializes in financial therapy or grief counseling. Processing the emotional aspects of sudden financial responsibility is just as important as understanding the technical details. Taking the Next Step Together If you and your spouse have fallen into the habit of letting one person manage all the finances, it’s not too late to shift. Schedule a money talk this week. Write down your accounts. Ask questions. Set a reminder to attend your next financial planning meeting together. At Five Pine Wealth Management , we can guide couples through these conversations. Whether you’re in the wealth accumulation phase, approaching retirement, or already enjoying it, we help both partners feel equally confident in their financial picture. Don't wait until a crisis forces financial literacy upon you. Call (877.333.1015) or send us an email today at info@fivepinewealth.com to schedule a consultation and start building the financial transparency and security your family deserves. Frequently Asked Questions (FAQs) Q: What if one spouse has no interest in learning about finances? A: Start small and focus on the essentials. Your spouse doesn't need to become a financial expert, but they should know where important documents are located, understand your basic monthly expenses, and know how to contact your financial advisor. Q: How often should we review our finances together if only one person manages them day-to-day? A: Quarterly check-ins work well for most couples. Schedule a regular 30-minute conversation to review your progress toward goals, discuss any major upcoming expenses, and ensure both partners stay informed about your overall financial picture. Q: What's the most important thing for the non-financial spouse to understand first?  A: Cash flow and immediate needs. Know where your checking accounts are, how much you typically spend each month, what bills are on autopay, and how to access emergency funds. This knowledge provides immediate stability if they suddenly need to take over financial management.