Wealth Strategies Journal Financial Planning Weekly Update (April 21, 2023)

Table of Contents

  • AICPA Financial Planning
  • Popular Press

AICPA Financial Planning

AICPA Personal Financial Planning Section – April 11, 2023

IRS Incorporates AICPA Recommendations in Strategic Operating Plan, By Kathleen Zinszer

Zinszer discusses the IRS’s most recent spending plan in relationship to AICPA’s past recommendations. The $80 billion plan includes goals and timetables covering areas such as operations support, enforcement, taxpayer services and IT modernization. AICPA has requested many of these items from the IRS in the past and it seems they are now being delivered.

AICPA Personal Financial Planning Digest – April 11, 2023

  • Top Story
Beneficiary IRAs: A guide to the RMD maze
Beneficiaries of a newly acquired individual retirement account (IRA) should be aware of the complex rules surrounding their required minimum distributions (RMDs), particularly since changes were introduced by the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 and the SECURE 2.0 Act.
  • Timely Planning Topics
No basis step-up for grantor trust assets if not in grantor’s estate

In a recent revenue ruling, the IRS confirms that the step-up in basis under Sec. 1014(a) does not apply to the assets held by an irrevocable grantor trust when the grantor dies if the grantor’s gross estate does not include the assets of the irrevocable trust.

Using retirement funds for education expenses
For people who need to use retirement funds to pay the expenses of higher education, there fortunately is an exemption from the 10% early-withdrawal penalty. This article summarizes key points to guide your discussion with clients considering early withdrawals for educational expenses.
  • Retirement, Insurance, and Investment Planning
Social Security: A guide to qualifying for spousal and survivor benefits

Even if your clients have not contributed to Social Security or didn’t work for the required time to qualify, they may still be eligible for benefits if they are married, divorced, or widowed.

Navigating client emotions around money and investing

Clients likely come to you with preexisting beliefs or hang-ups around money, ranging from viewing wealth as unethical to a status symbol. Help them improve their money mindset and finances simultaneously by surfacing limiting beliefs, setting goals, and building healthy habits.

When should your clients enroll in Medicare?

Delaying Medicare enrollment can be a costly mistake for clients of retirement age. Unless your client is covered by a group health plan that meets Medicare’s “creditable coverage” standards, they could face permanent late enrollment penalties if they delay. Most clients should sign up for Medicare Part A right when they turn 65 and Parts B and D within eight months of the time they are no longer “actively covered” by a group health plan.

  • AICPA PFP News
Webcast: How to guide clients through the maze of Social Security decisions

Every day, 10,000 Baby Boomers turn 65 and seek guidance on the optimal approach to maximize their personal benefits from the Social Security program. The best solution might not be straightforward, as no two financial situations are identical. In the webcast “How to Guide Clients Through the Maze of Social Security Decisions ,” Social Security expert Ted Sarenski, CPA/PFS, will provide insights that you can apply to your clients’ unique situations, offer a refresher on key rules to know, and provide an overview of the Social Security landscape. The webcast is scheduled for Monday, April 24 or Monday, May 8 from 1 to 3 p.m. ET and is free for PFP Section members, with CPE. PFS credential holder-only members can enjoy discounted CPE.

Deeper CPA financial planner connections with Susan Tillery
Susan Tillery, CPA/PFS, embarked on her career in tax and eventually founded her own fee-for-service financial planning firm with her husband, Tom. Their firm aims to provide clients with education and planning, and they partner with other advisers to handle investments and tax-compliance work. Moreover, they also offer educational resources to CPAs interested in adding financial planning to their services. In this installment of the PFP Section podcast , Lyle Benson, CPA/PFS, interviews Tillery about her practice and journey.
  • Industry News and Trends
Social Security strategies for clients

When it comes to Social Security benefits, the decision of when to file can have a significant effect on one’s income and assets over time. Those with less than $250,000 in retirement savings should consider delaying their retirement benefits to allow their funds to grow as much as possible. However, for those with more than $250,000, when to file for Social Security is a more complex question, with a ripple effect on the rest of their retirement plan.

How clients can avoid a retirement tax bomb and protect their savings

Clients could be facing a tax bomb in retirement, which could result in unnecessarily high tax bills, inflated Medicare premiums, and higher taxes for heirs. To lessen the potential damage, consider accounts that are not subject to taxes or required minimum distributions, such as Roth IRAs and Roth 401(k) plans, to better control tax bills in retirement.

SECURE 2.0 Act provides tax relief for emergency expenses

Starting in 2024, two new provisions of the SECURE 2.0 Act will allow employers to offer a special emergency savings account, or “sidecar account,” for plan participants up to a maximum of $2,500. Participants can make at least one withdrawal per month, and the first four withdrawals per year cannot be subject to fees.

Wealth tax proposals on the horizon as Tax Cuts and Jobs Act expires at end of 2025

Democrats in Congress are proposing new tax hikes on the wealthy, including a minimum tax on billionaires and an annual tax on unrealized capital gains of the ultra-wealthy. These proposals face significant pushback and questions of their feasibility and constitutionality, but they have strong public support.

Popular Press

Forbes: What Do You Want For Retirement? If You’re In The Latter Part of Your Career, It’s Time To Start Thinking About That Question, By Halsey Schreier

Schreier shares four tips for individuals in their 40s, 50s, and early 60s on how to position themselves for a successful retirement.

Forbes: Stop Overspending With This One Simple Rule (From a Debt-Free Millionaire), By Bernadette Joy

Debt-free millionaire Bernadette Joy encourages readers to explore a new outlook on budgeting with her one-dollar rule, which is based of permission rather than restriction and removes the shame from shopping and splurging.

The New York Times: Retirement-Age Money Issues: Planners Weigh In on Your Questions, By Elizabeth Harris

Harris’s answers some of the most pressing concerns of financial planners, including questions on social security and student loan debt.

The New York Times: Banks Are Closing Customer Accounts, With Little Explanation, By Tara Siegel Bernard and Ron Lieber

Increasing attention to seemingly suspicious transactions has led to some people suddenly losing access to their bank accounts with little or no explanation. Bernard and Lieber explore why this is happening and what customers can do about it.

Posted by Nicholas Ward, Associate Editor, Wealth Strategies Journal

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