Tax Strategy Scan: Rightsizing IRA and 529 Distribution Costs

Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.

Don't let pro rata rules trip up your retirement plan: Clients who gain a working knowledge of "pro rata" rules and the various ways in which they affect taxpayers can avoid expensive mistakes and boost returns, according to Morningstar. The term "pro rata" is Latin for "in proportion," and this approach may help clients considering IRA conversions or mulling their distribution options from their retirement plans. – Morningstar

5 tax tips for retirees: There are several preparations aging clients can make in advance of retirement to ensure they won't be paying Uncle Sam a fortune in taxes, according to the Motley Fool. This includes making the most of medical and mortgage interest deductions, picking investments that are exempt from federal taxes, such as municipal bonds donating to charity. -- Motley Fool

Spending more just to ‘save’ money is a self-defeating strategy: Clients should carefully consider the strategy of spending more to shrink a tax bill, according to The New York Times. For example, buying a larger, more expensive house to claim a higher amount of mortgage interest doesn't necessarily deliver the payoff one might expect. -- The New York Times