There is a gap between Tax Planning and Tax Preparation
  • Traditionally, financial advisors have shied away from tax planning and referred tax questions to tax preparers.
  • Tax preparers don’t have time during tax season to discuss tax planning. They are mainly focused on maximizing deductions and credits based on what has already happened.
  • This has created a vacuum in the industry that very few advisors or tax preparers are filling.
Tax Planning is about paying attention to the Effective Marginal Rates not the overall tax rate
  • In retirement, overall federal taxes are likely to be lower than they were during the working years.
  • But the last few thousands of dollars of distributions can be taxed in very unexpected ways.
  • Taxable distributions, Social Security and Capital Gains calculations can converge to create effective marginal rates as high as 50%.
  • We offer discounted tax planning software to help advisors identify these situations and help clients manage distributions in a more tax savvy way.
Tax Planning can be highly valuable to Pre-Retirees
  • Your clients will start making decisions 5-10 years before retirement that will affect the rest of their lives.
  • Decisions like paying off a mortgage, delaying Social Security and preparing for emergencies can all affect the way distributions are taxed in retirement.
  • Preparing ahead of time for RMDs and the death of a spouse can give the client more flexibility and better manage marginal rates as life transitions occur.
Tax Planning is about getting the details right
  • Advisors and clients can often make sloppy decisions and still be able to pay for basic living expenses in retirement.
  • Tax planning is about maximizing that discretionary or “fun money”
  • In some cases, good decisions can  be the difference in taking a vacation annually vs paying Uncle Sam that money in taxes
Tax Cuts and Jobs Act gives planners a window of opportunity
  • Most Americans are experiencing the lowest tax rates of their lifetime right now.
  • Without an extension, rates will return to higher levels in 2026.
  • This is an opportunity to take advantage of strategies like Roth Conversions while working at potentially lower rates than clients will see in retirement since rates could be higher in the future.
  • Want to receive more information on being Tax Savvy?