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Last year, Congress enacted the first overhaul of the U.S tax code in more than 30 years. Unfortunately, the new law disadvantaged investors, financial planners and registered investment advisors in two important ways.

First, the law eliminated the ability of investors to deduct advisory fees from their taxes. Second, the law limits the ability of small-business owners to take advantage of the beneficial tax treatment for pass-through businesses.

The Financial Planning Association and members across the country are proactively engaging federal lawmakers to encourage Congress to amend the new tax law accordingly so financial planners, RIAs, and investors are not disadvantaged.

Consumers are concerned with their prospects for retirement and engage with financial professionals to help them with an ever-changing array of products and services. By eliminating the deduction of financial advisory fees, it effectively raises the cost of investment advice to investors, which negatively impacts millions of Americans saving for retirement.

As one of its policy priorities, FPA members were in Washington, D.C., in June advocating to their federal lawmakers to make financial planning fees deductible. Financial planners help individuals and families with the entirety of their financial health so they can plan for retirement with confidence. A tax deduction specifically for financial planning fees would signal that this profession provides needed services for all Americans, not just those with significant investment accounts.

Financial planners also offer vital advice on college planning, estate planning, insurance needs, tax efficiency and retirement planning. Our FPA members and their clients know the value of holistic financial planning.

Pass-Through Limits

Another provision limited the ability of small financial professional business owners, including many FPA members who are RIAs and financial planners, to take advantage of the beneficial tax treatment for pass-through businesses.

For example, the law limits the income threshold requirements for pass-through businesses to receive the 20% deduction, which is not equal for all types of businesses. Financial planning and investment advisory firms structured as pass-through businesses can deduct 20% of their business income on their personal tax return if they make less than $157,500 if filing as an individual, or $315,000 when filing jointly. The 20% deduction phases out from $157,500 to $207,500 (individual) or $315,000 to $415,000 (joint) and is completely lost when those thresholds are reached. Other types of businesses, including architects and engineers, are exempt from the monetary thresholds and thus can take the 20% deduction in full.

To protect its members and their clients, FPA is proactively seeking these amendments to what is being called ‘Tax Cuts 2.0.’ It helps small-business owners, particularly those in the financial planning area, and helps those saving for the future. Our members are engaged in this effort and have already sent nearly 1,000 letters to members of Congress so far.

Rep. Kevin Brady (R-TX), Chairman of the House Ways and Means Committee, recently stated that he expects Congress to introduce a package of multiple bills related to tax reform this fall, perhaps with a House vote as early as September. Brady also may focus part of the package on retirement savings and incentives for business innovation. Focusing on supporting tax deductions for American investors and the small RIA and financial planning businesses they work with will strengthen the tax package.

Expanding access to financial planning services is a key goal of FPA. Our thousands of members across the country support measures that will improve the financial health of American retirees and families saving for their futures. With 10,000 baby boomers retiring every day, reworking the tax cuts with these important changes will ensure that American investors “make the front page” of the 2.0 tax package.

Join us in ensuring Congress does the right thing for Americans and their retirement goals.

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Frank Paré, CFP® is the 2018 president of the Financial Planning Association.