Some clients may know the importance of asset allocation and how it can impact pre-tax returns, but most probably haven’t thought about asset location, which can strongly influence what remains after taxes. A comprehensive investment plan should help improve after-tax outcomes by coordinating asset allocation with asset location.

Asset location refers to the type of account that holds an investment, such as tax-free accounts including Roth IRAs and Roth 401(k)s; tax-deferred accounts including traditional IRAs and retirement plans; and taxable accounts such as brokerage. For example, tax-friendly accounts like Roth and traditional IRAs and 401(k)s can be great for investments that generate high levels of income or portfolios that require ongoing rebalancing or subject to substantial capital gains. Taxable brokerage accounts can provide opportunities for tax loss harvesting, which lets clients offset realized gains with realized losses in the same or another taxable account they own. While asset allocation decisions may explain the majority of a client’s pre tax returns, tax smart asset location helps them keep more of what they’ve earned. 

Take a few minutes to explore the Eaton Vance Tax Education Center at for more useful resources to help you meet a variety of tax forward investing needs.  

Tax-loss harvest transactions aren't beneficial in a retirement account because the losses generated in a tax-deferred account cannot be deducted.

The Firm does not provide tax advice. The tax information contained herein is general and is not exhaustive by nature. Tax laws are complex and subject to change. Investors should always consult their own legal or tax professional for information concerning their individual situation.

The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Eaton Vance disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Eaton Vance are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance fund. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Past performance is no guarantee of future results.