Although financial advisors and accountants traditionally operate in different universes, the much-discussed tax reform legislation going into effect this year will have an impact on everyone’s bottom line. Fiduciaries providing holistic advice and financial planning services can proactively discuss with clients how certain elements of the tax reform package will affect their overall financial health.
Advisors can demonstrate value by reaching out to talk about how changes to the tax code will affect their investments, and what can potentially be done in response. In addition, advisors can offer to set up joint meetings with each client’s accountant in order to educate them on tax reform, and collaborate on strategies for leveraging newfound opportunities and avoiding potential pitfalls.
Below are three changes to the federal tax code that could have an impact on many of your clients:
529 Plans: The tax reform package allows Americans to use funds they save in 529 college savings plans to fund other types of education in addition to college. People can now use 529 plans to save for K-12 private school tuition, and even pay for K-12 tutoring. By expanding the use of 529s, these changes open 529s to a broader spectrum of investors seeking to save for their children’s education. Advisors should make sure their clients understand the amendments to 529s, and in light of these changes, how these savings vehicles can help them meet their individual families’ goals.