Wednesday, January 21, 2015

Tax Planning for Wealthy Clients

Maddy Perkins for Financial-Planning writes: With the top income tax rate at 39.6%, advisors need to be savvy about the tax-saving strategies they utilize for their high net-worth-clients. 

Given the income tax rate, tax bracket management is increasingly important, Bob Keebler, a Green Bay, Wisc.-based CPA, told attendees at the 2015 AICPA Personal Financial Planning Conference. In many ways, he said, finding a tax edge for clients in higher brackets -- particularly the 35%, 33% and 28% brackets -- is increasingly difficult.
"Good money managers may be able to find tax alpha," Keebler said. "But year-over-year, it’s difficult to create."

His two biggest suggestions for advisors? Utilize Roth conversions where applicable and don't shy away from life insurance as a tax-savings plan.

If you're up against estate taxes, Roth IRAs can be more efficient and are great options for many clients, Keebler said. But, it's important to pay attention to state income tax laws when converting -- especially when clients plan on moving for their retirement.
"When you're thinking Roth conversions, most of our thinking and writing has stopped at federal law," he said. "That's wrong.

"We have to look at estate tax, federal and state estate tax, and we have to look at the dynamics of the state income tax," he added. SNIP - the article continues @ Financial Planning, click here to continue reading...


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