Tax Strategy Scan: The RMD delay with fewer consequences
Ways around having to pay as much as a 50 percent penalty, plus, inheriting Roth IRAs, more efficient retirement portfolios, and other highlights from our weekly roundup of tax-related investment strategies and news your clients may be thinking about.
Strategies that can avoid a 50% hit to your client's retirement savings: RMDs can be a drag for the unprepared client and can cost them as much as a 50 percent penalty if they fail to take them. Advisors can point out several options that can provide clients some tax advantages, offer a lifetime stream of income or help them leave a legacy to future generations, according to CNBC. Here's how longevity insurance, munis, 529 contributions and charitable giving can help. -- CNBC
How a Roth IRA conversion can help you pass on more wealth: A recent study shows that Roth IRA conversions can help clients leave a larger legacy to their heirs, according to Money. But determining how beneficiaries come out ahead when they inherit money in tax-deferred or tax-free accounts depends on a number of factors. This includes the client's marginal tax rate when converting savings to a Roth, their heirs' marginal tax rate when they withdraw the funds, how taxes are paid on the conversion, and how long the money remains in the Roth. -- Money
Find the right investments for your client's retirement portfolio: Here's a checklist from Morningstar that advisors can use to help clients keep their retirement plans on track. A client's knowledge level, desire to be hands-on, tax status, and tolerance for short-term volatility can help identify the right investments. -- Morningstar