Year-End Steps to Help Clients with Retirement Planning

Year-End Steps to Help Clients with Retirement Planning

Financial advisors need to be wary this time of year, particularly when assisting clients who are deep into retirement planning.

Our linked author, Ed Slott, is a highly regarded specialist in retirement and tax issues. He’s put together a checklist on steps to take to serve your customers as the year comes to a close. Let’s check it out.

Required minimum distributions on IRAs. This event takes place every year, but Slott says it’s often missed, and the cost to clients is dear: they take a 50% penalty on any funds that weren’t distributed. While the tax authorities often look the other way, nobody needs the hassle, particularly at holiday time.

Tax reform has created complications that may effectively remove the tax deduction for charitable contributions. If a client has not yet taken their RMD, they should be encouraged to take advantage of the qualified charitable distribution clause. This removes the funds from taxable income, thereby creating a virtual charitable deduction, while simultaneously clearing the books on the RMD.

Under the new tax regime, starting this year, Roth conversions cannot be reversed. The tax implications are complex and need to be carefully considered in terms of the individual client’s needs. Any actions need to be made before year end, so move with alacrity, but take good care.

Again on the RMD front, unprepared or unaware clients may find themselves liable for penalties if they didn’t withhold or prepay a sufficient amount for taxes. In this case, taxes can be withheld from IRA distributions to cover any shortfall. Clients are often touchy about complying with complex tax requirements and advisors may need to consult directly with their accountants to assure that everything is ship-shape. This is the wrong time of year for the tax man to be coming down the chimney.

For more information, please read:
Seven Year-End Retirement Planning Strategies | Financial Advisor


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