1. Advisors should enable clients to maximize the nature of growing money tax-free with a Roth IRA, whether they are investing in traditional stocks and bonds or alternative assets like private stock, real estate, tax liens and others.

2. The Solo 401(k) has higher contribution limits and allows tax-deductible 401(k) salary deferrals to the plan of up to $15,500 for 2008 and should be examined as opportunities for the self-employed. These plans allow self-employed individuals or business owners with no employees other than a spouse to defer more of their income while aggressively saving for retirement. Additionally, individuals aged 50 or older can make an additional catch-up salary deferral contribution of $5,000 for 2008. And business owners can make tax-deductible profit-sharing contributions up to 25 percent of compensation, with an annual maximum of $46,000 for the year. Differences between the maximum contributions for other plans, like the SEP IRA, can be substantial. A self-employed business owner, age 50 with $100,000 in compensation, may save up to $20,000 more with a Solo 401(k) than with the traditional SEP-IRA or profit sharing plans. Additionally, the Solo 401(k) allows participant loans, unlike its predecessors. Tax-free loans are acceptable in a Solo 401(k) up to 50 percent of the total 401(k) value with a maximum of $50,000. In addition to investing in stocks and bonds, and as with a traditional IRA, individuals with Solo 401(k) can also invest in alternative assets, such as private stock, real estate, tax liens, in these plans.

3. Advisors need to stay on top of required minimum distribution deadlines and set reminders in a timely fashion – IRA owners can be forced to pay 50 percent excise tax on amounts not taken out by the specified timeframe.

4. Be aware of every IRA account the client has and consolidate accounts where possible to avoid miscalculations on RMDs and resulting hefty tax penalties for clients.

5. Advisors should make sure accounts are liquid enough to cover RMDs, such as with accounts that may include illiquid alternative assets such as real estate, trust funds, etc. Before RMDs begin, advisors might want to consider consolidating funds from other accounts.

Click here to download a pdf (936k) of the entire special section: IRA Rollovers.

The section includes:

Industry experts Bruce Beaty and James R. Wagner share tips about how advisors can help high-end boomers prepare for a tax-free retirement; reducing taxes (and potential tax penalties) on IRA earnings; and IRA conversion ideas.

  • How to help high-end boomers prepare for a tax-free retirement
    by Bruce Beaty

  • 5 tips to reduce taxes on IRA earnings and, conversely, avoid penalties
    by James R. Wagner

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