HALF-TIME STRATEGY 2019 REPORT: PROACTIVE RETIREMENT ACCOUNT ACTIONS, PLANNING CONVERSATIONS AND DEADLINES TO COMPLETE BEFORE YEAR END

Monday, July 08, 2019

With the year half over, it’s prime time to huddle, refocus your team and commit to reaching your 2019 goals—for your clients and your advisory business.

Here are 7 strategies advisors can leverage now to notch a win for clients in the 2019 retirement planning game: 

1. Analyze the Film: Review 2018 Tax Returns The 2018 tax season is now over for most taxpayers, and it has been a learning experience for many. This is the first time both advisors and clients will know the actual effects of the Tax Cuts and Jobs Act. Review clients’ 2018 returns and use these results to plan for 2019. Assess the effect of the Qualified Business Income (QBI) Deduction on 2018 tax returns to plan for 2019 results. Did retirement plan contributions affect the client’s QBI deduction or their tax bracket? Will it be better for clients to contribute to Roth 401(k)s or Roth IRAs rather than making pre-tax contributions? Were tax planning opportunities missed? Now is the time to adjust the game plan for 2019. Coach them up!

2. Put the NUA Conversation in Your Starting Line-Up: Significant tax savings can be achieved by leveraging the net unrealized appreciation (NUA) of company stock in a retirement plan. The difference between paying taxes at ordinary income rates vs. long term capital gain rates could mean thousands of dollars in savings. However, there are specific rules to the NUA game. Any violation and the entire process could be disqualified. Timing is critical. To use the NUA strategy, there must be a lump sum distribution from the plan. This means the entire plan must be emptied in one tax year. For 2019 NUA transactions, that means the plan must be completely distributed by December 31, 2019. No one wants to watch precious seconds tick off the clock as they desperately attempt a final push toward a successful NUA lump sum distribution. Like missing an important free throw at the end of a basketball game, starting an NUA drive too late in the year could be catastrophic. A person has a maximum of only four attempts at NUA, and two of those are disability and death. The only way to truly enjoy the benefits of the NUA game is to hit the crucial shots when they matter most. Don’t foul out—identify NUA candidates now.

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